For a Capital Lease,the Amount Recorded Initially by the Lessee

question 11

Multiple Choice

For a capital lease,the amount recorded initially by the lessee as a liability should

• A) exceed the present value at the beginning of the lease term of minimum lease payments during the lease term.
• B) exceed the total of the minimum lease payments during the lease term.
• C) not exceed the fair value of the leased property at the inception of the lease.
• D) equal the total of the minimum lease payments during the lease term.

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Definitions:

Economic Profits

The excess of total revenue over total costs, including both explicit and implicit costs, reflecting the financial gain in terms of opportunity costs.

Price-Taker Market

A market situation in which the sellers or buyers have no control over the prices at which they buy or sell goods or services.

Limited Resources

A concept in economics that refers to the finite availability of resources such as time, money, and materials, necessitating allocation decisions.

Economic Profits

The difference between total revenue and total costs, including both explicit and implicit costs, indicating the financial success of a business beyond breaking even.