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Hi tutor,
The company has a year end 31 December and is deciding between to lease or to purchase a machine.
“If machine is purchased, payment for maintenance cost will be made in January of the first year of operation.” This means the first maintenance payment will be made in year 0, right? In the answer, however, the first maintenance payment was made in year 1.
Am I wrong here?I am waiting for BPP to deliver to me the current edition of the Revision Kit and so I am not sure whether or not the question will still be question 50.
If the question you are referring to is AGD, then it does not say that payment for maintenance cost will be in January of the first year of operation. The payment in January of the first year of operation must refer to the payment for the purchase of the machine.
(It would not be logical to only pay maintenance once or to pay it before the machine has even been used)
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