Accounting MCQ
Accounting Chapter 15
Nichols Fruits leased farm equipment from King Machinery on January 1, 2016. The present value of the lease payments discounted at 10% was $40 million. Ten annual lease payments of $6 million are due at the beginning of each year beginning January 1, 2016. King had constructed the equipment recently for $33 million. The total decrease in earnings (pretax) in Nichols' 2016 income statement would be:
Nichols Fruits leased farm equipment from King Machinery on January 1, 2016. The present value of the lease payments discounted at 10% was $40 million. Ten annual lease payments of $6 million are due at the beginning of each year beginning January 1, 2016. King had constructed the equipment recently for $33 million. The total decrease in earnings (pretax) in Nichols' 2016 income statement would be:
Nichols Fruits leased farm equipment from King Machinery on January 1, 2016. The present value of the lease payments discounted at 10% was $40 million. Ten annual lease payments of $6 million are due at the beginning of each year beginning January 1, 2016. King had constructed the equipment recently for $33 million. The total decrease in earnings (pretax) in Nichols' 2016 income statement would be:
A) $3,400,000.
B) $4,000,000.
C) $6,066,667.
D) $7,400,000.
Answer: D
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