Asset Similarity Kline Corporation rents a delivery truck on January 1, 2001, for one year, paying the rent of

$6,000 in advance. On the same day, Kline purchases and installs a refrigeration unit on the truck at a cost of $30,000.

The truck is expected to be rented each year for 5 years, and the refrigeration unit is expected to have a life of 5 years.

a. What assets and amounts would be reported in the balance sheet on January 1, 2001, and how would they be classified? What expenses would be reported in the income statement for 2001 and 2002? Explain how the assets are similar to and different from each other.

b. Is management more efficiently using its assets in either case? Explain.