A company is deciding between two options: (1) purchase a piece of equipment for $10,000 or (2) lease the same piece of equipment for three years

A company is deciding between two options: (1) purchase a piece of equipment for $10,000 or (2) lease the same piece of equipment for three years and then return the equipment to the owner. The lease payments are $182.53 per month and have a present value of $6,000. If the company decides to lease, for what amount would the leased asset be recorded at the beginning of the lease?

A) $10,000.

B) $6,000.

C) $4,000.

D) $6,571.

Answer: B

Before signing a lease, a company reports total assets of $500,000 and total liabilities of $300,000. The company then signs a 30-month lease for equipment with payments of $922.21 each month. The lease payments have a present value of $25,000. After recording the inception of the lease, the company would report which of the following?

A) Total assets of $527,666.30, and total liabilities of $325,000.00.

B) Total assets of $525,000.00, and total liabilities of $327,666.30.

C) Total assets of $527,666.30, and total liabilities of $327,666.30.

D) Total assets of $525,000.00, and total liabilities of $325,000.00.

Answer: D