ABC INC.leased a new machine from QRS on July 1, 2014, under a lease with the following pertinent information: ABC INC.has the option to purchase the machine at the end of the lease term, by paying $40,000, which approximates the expected fair value of the machine on the option exercise date.The cost of the machine on QRS's accounting records is $150,000.On July 1, 2014, ABC INC.should record a net capitalized leased asset of:
A)$178,500
B)$190,000
C)$150,000
D)$189,300

Question

ABC INC.leased a new machine from QRS on July 1, 2014, under a lease with the following pertinent information:  ABC INC.has the option to purchase the machine at the end of the lease term, by paying $40,000, which approximates the expected fair value of the machine on the option exercise date.The cost of the machine on QRS's accounting records is $150,000.On July 1, 2014, ABC INC.should record a net capitalized leased asset of:
A)$178,500 
B)$190,000 
C)$150,000 
D)$189,300

Quizplus · Accepted Answer

The Answer of ABC INC.leased a new machine from QRS on July 1, 2014, under a lease with the following pertinent information:  ABC INC.has the option to purchase the machine at the end of the lease term, by paying $40,000, which approximates the expected fair value of the machine on the option exercise date.The cost of the machine on QRS's accounting records is $150,000.On July 1, 2014, ABC INC.should record a net capitalized leased asset of:
A)$178,500 
B)$190,000 
C)$150,000 
D)$189,300

ABC INCLeased a New Machine from QRS on July 1, 2014