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Alfarm Corporation enters into a lease agreement for the use of a piece of machinery for four years beginning October 1, 2012. The lease terms

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Alfarm Corporation enters into a lease agreement for the use of a piece of machinery for four years beginning October 1, 2012. The lease terms are as follows: Annual payments (starting October 1, 2012) $57,358 Fair value 200,000 Present value of lease payments 200,000 Salvage value The useful life of the machine is four years and the company's discount rate is 10%. The company accounts for the lease as a finance lease and uses the straight-line depreciation method. Assuming there were no tax effects, if the company had accounted the lease as an operating lease, on December 31, 2012, it would have most likely reported: O a lower total asset turnover ratio than reported using a finance lease. the same cash flow debt coverage ratio as reported using a finance lease. a higher current ratio than reported using a finance lease

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