Which Condition Would Not Result in a Finance Lease

question 25

Multiple Choice

Which condition would not result in a finance lease?

• A)Risk of breakage is with the lessee.
• B)Reward of high resale value is with the lessor.
• C)Risk of change in rental rates is with the lessee.
• D)Reward of longer than expected useful life for the leased asset is with the lessee.

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Definitions:

Rate Of Return

A financial metric used to measure the amount of return on an investment relative to the investment's cost.

Total Assets

The sum of all current and non-current assets owned by a company, showing the total value of what a company owns or controls.

Depreciation

The systematic allocation of the cost of a tangible asset over its useful life, reflecting wear and tear or obsolescence.

Group Depreciation Method

An accounting method that applies a single depreciation rate to a group or pool of assets with similar characteristics and useful lives, instead of depreciating each asset individually.