Kauffman Tire Repair has leased a machine.The annual payments are $9,000.The life of the lease is seven years.It is estimated that the useful life of the machine is eight years.How will the company record this acquisition?
A) The machine will be recorded as an asset with a cost of $63,000.
B) The company will not record the machine as an asset but will record rent expense of $6,000 per year.
C) The machine will be recorded as an asset at the present value of the annual cash payments, $9,000 for seven years.
D) The machine will be recorded as an asset, at the present value of the annual cash payments, $6,000 for eight years.
Correct Answer:
Verified
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