Which of the Following Conditions Qualifies a Lease as a Finance

question 108

Multiple Choice

Which of the following conditions qualifies a lease as a finance lease?

• A)The present value of the minimum lease payments covers substantially all of the fair value of the property at the inception of the lease
• B)The lease term covers the majority of the asset's economic life
• C)The lease transfers the risks and benefits of ownership to the lessee
• D)The leased asset is specific to the needs of the lessee and without significant changes would not be of use to another company
• E)All of these

---

Definitions:

Forbidden

Prohibited or not allowed by law, rules, or customs.

Reactance

A psychological response where individuals act in opposition to external pressures or constraints to maintain their freedom of choice.

Loss of Freedom

The experience of having one's autonomy, choices, or rights restricted or removed, often leading to feelings of constraint or oppression.

Distressed

A state of emotional strain typically resulting from difficult or adverse situations.