On January 2, 2012, Tech Metals Co $\begin{array}{ll}Machine&500,000\\Lease~Obligation&~~~~~~~~~500,000\end{array}$ B) $\begin{array}{l}\text{Prepaid Rent}&250,000\\\text{Lease Obligation}&~~~~~~~~~~~~~~~250,000\\\end{array}$

On January 2, 2012, Tech Metals Co. leased a mining machine from BX Leasing Corporation. The lease qualifies as an operating lease. The annual payments are $50,000 at the end of each year, and the life of the lease is 10 years. What entry would Tech Metals Co. make when the machine is delivered by BX Leasing Corporation.?

A) $\begin{array}{ll}Machine&500,000\\Lease~Obligation&~~~~~~~~~500,000\end{array}$

B) $\begin{array}{l}\text{Prepaid Rent}&250,000\\\text{Lease Obligation}&~~~~~~~~~~~~~~~250,000\\\end{array}$

C) Rent Expense $~~~~~~~~$ 50,000
Cash $~~~~~~~~~~~~~~~~~~~~~~~~~~$ 50,000

D) No entry is necessary.