When Using the Discounted Cash Flow Approach to Lease Capitalization

question 32

Multiple Choice

When using the discounted cash flow approach to lease capitalization, how is the off-balance sheet lease obligation estimated?

• A) present value of the replacement cost of the leased asset
• B) rent expense times capitalization rate
• C) present value of the future minimum lease payments
• D) present value of the historical cost of the leased asset

---

Definitions:

Droughts

Extended periods of low precipitation causing shortage of water, affecting ecosystems, agriculture, and water supply.

Environmental Refugees

Individuals or communities forced to relocate due to environmental factors such as climate change, natural disasters, or degradation of their natural habitat.

Warmer World

A reference to the phenomenon of global warming, indicating an increase in Earth's average surface temperature due to greenhouse gas emissions.

Evolutionary Adaptation

The process by which organisms adjust to their environment over time through changes in genetics, behavior, or physiology, enhancing their survival and reproduction.