11/29/23, 10:17 AM
Question 39 of 100 - Quiz Two
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On May 1, 2023, Ivanhoe Corp. leased equipment to Darwin Inc. for one year under an operating
lease. Instead of leasing it, Darwin could have bought the equipment from Ivanhoe for $797000
cash. At this time, Ivanhoe's accounting records showed a book value for the equipment of
$711000. Depreciation on the equipment in 2023 was $99000. During 2023, Darwin paid
$23000 per month rent to Ivanhoe for the 8-month period, and Ivanhoe incurred maintenance
and other related costs under the terms of the lease of $16500.
The pre-tax expense reported by Darwin from this lease for the year ended December 31, 2023,
should be
$99000.
$68500.
$167500.
$184000.
$23000 × 8 =
$184000
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