Which of the Following Is Not Among the Criteria Used

question 20

Multiple Choice

Which of the following is not among the criteria used by a lessee to classify a lease as a capital lease?

• A) The present value of the minimum lease payments is greater than or equal to 75% of the fair market value of the asset.
• B) The noncancellable lease term is greater than or equal to 75% of the estimated economic life of the asset.
• C) The lease specifies that ownership of the asset transfers to the lessee.
• D) The lease contains a bargain purchase option.

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Definitions:

Corporate Façade

Refers to an outward appearance maintained by a corporation to conceal its actual purposes or state, often used in a critical context to suggest a lack of transparency or authenticity.

Escape Liability

A legal strategy or circumstance that allows an individual or entity to avoid responsibility for an action or outcome.

Limited Liability

Status that specifies that an individual’s liability will not go beyond his or her original investment.

Personally Liable

The responsibility of an individual to pay a debt or fulfill an obligation from their own assets, not just the assets of a business or an entity they represent.