For a Lessor to Classify a Lease as a Capital

question 35

Multiple Choice

For a lessor to classify a lease as a capital lease, ________.

• A) any one of the lessee criteria must be met; collectibility of the required minimum lease payments must be reasonably assured; and there must be no material uncertainties regarding the amount of future nonreimbursable costs to be incurred by the lessor under the terms of the lease
• B) all four of the lessee criteria must be met; and collectibility of the required minimum lease payments must be reasonably assured OR there must be no material uncertainties regarding the amount of future nonreimbursable costs to be incurred by the lessor under the terms of the lease
• C) any one of the lessee criteria must be met; and collectibility of the required minimum lease payments must be reasonably assured OR there must be no material uncertainties regarding the amount of future nonreimbursable costs to be incurred by the lessor under the terms of the lease
• D) all four of the lessee criteria must be met; collectibility of the required minimum lease payments must be reasonably assured; and there must be no material uncertainties regarding the amount of future nonreimbursable costs to be incurred by the lessor under the terms of the lease

---

Definitions:

Mutual Interdependence

A situation in which the actions of one firm in an oligopolistic market influence, and are influenced by, the decisions of other firms within the same market.

Monopolistic Competition

A market structure characterized by many firms selling products that are similar but not identical, allowing for competition on factors other than price.

Pure Competition

A market structure characterized by a large number of small firms, identical products, and no barriers to entry or exit, allowing for perfect knowledge and resource mobility.

Pure Monopoly

A market structure where a single seller dominates the market with no close substitutes for the product or service offered.