On January 1, 2011, Elston Manufacturing leases a mold making machine for four years. The lease...

 

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On January 1, 2011, Elston Manufacturing leases a mold making machine for four years. The lease calls for a payment of $12,000 per year payable at the beginning of the year. At the end of four years, Elston will return the machine to the lessor, who will sell it for scrap. The appropriate interest rate is 9%. Elston depreciates all assets on straight-line basis. For the year ending December 31, 2012, the total expense pertaining to this lease reported on the Elston's income statement is closest to: A. $12,494. B. $11,992. C. $12,000. On January 1, 2011, Elston Manufacturing leases a mold making machine for four years. The lease calls for a payment of $12,000 per year payable at the beginning of the year. At the end of four years, Elston will return the machine to the lessor, who will sell it for scrap. The appropriate interest rate is 9%. Elston depreciates all assets on straight-line basis. For the year ending December 31, 2012, the total expense pertaining to this lease reported on the Elston's income statement is closest to: A. $12,494. B. $11,992. C. $12,000.

Answer rating: 100% (QA)

Solution The correct answer is A 12494 Explanation The lease is classified as a finan... View the full answer