For the Lessor to Recognize a Lease as a Sales-Type

question 35

Multiple Choice

For the lessor to recognize a lease as a sales-type lease, under ASC 842, the following must occur.

• A) At least one of the finance lease criteria is met, at least one of the certainty criteria is met, and there is a manufacturer or dealer's profit.
• B) At least one of the finance lease criteria is met.
• C) More than one of the finance lease criteria are met, both certainty criteria are met, and there is a manufacturer or dealer's profit.
• D) Only one of the finance lease criteria is met, both certainty criteria are met, and there is a manufacturer or dealer's profit.

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Definitions:

Transfer Price

The price charged for goods or services transferred between departments or divisions within the same company.

Variable Cost

A cost that varies directly with the level of output or production, such as raw materials or direct labor costs.

Division Delta

A specific division, unit, or segment within a larger organization, identified by the designation "Delta."

Transfer Price

The price at which goods and services are transferred between departments or divisions within the same company or between affiliated entities.