Lessees May Try to Avoid Having a Lease Be Classified

question 52

Essay

Lessees may try to avoid having a lease be classified as a capital lease.Explain why a lessee might want to avoid a capital lease and how the FASB rules may be overcome to allow classification as an operating lease.

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Definitions:

Perceived Needs

The needs that customers believe they require, which may not necessarily align with their actual needs or wants. These can be influenced by marketing, societal pressures, or personal beliefs.

Marketing Concept

A business philosophy focusing on identifying and meeting the needs and wants of customers through the development, promotion, and sale of products or services.

Customer Orientation

A business strategy that focuses on creating a positive experience for customers by understanding and meeting their needs.

Ownership Utility

The value that comes from a product's ability to satisfy ownership rights, including the use, control, and transfer of the product.