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The Parent leases a machine to its 100%-owned Subsidiary. The direct financing lease required annual payments in advance of $3,837 for 6 years. The present

The Parent leases a machine to its 100%-owned Subsidiary. The direct financing lease required annual payments in advance of $3,837 for 6 years. The present value of the minimum lease payments at 6% interest is $10,000. What will be the effect to consolidated net income from any adjusting entries that are made on the worksheet for the first year?

a.$1,667

b.$3,837

c.$0

d.$20,000

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