What Is the Proper Accounting Treatment to Record a Variable

question 43

Multiple Choice

What is the proper accounting treatment to record a variable lease payment indexed off the CPI?

• A) Calculate the lease liability based on expected payments over the life of the lease after considering increases in the CPI.
• B) Calculate the lease liability based on the base payment and debit an additional expense in subsequent years based on the change in the CPI.
• C) Record the lease liability based on highest annual increase in the CPI for the past 10 years.
• D) Capitalize and depreciate the increased payments based on CPI indexing.

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Definitions:

Recessive Alleles

Gene variants that can be masked by dominant alleles and are expressed only when two copies are present.

Dominant Alleles

Dominant alleles are versions of genes that produce a dominant trait which will express itself in the phenotype, even when only one copy is present.

Monozygotic Twins

Identical twins that originate from a single fertilized egg, splitting and developing into two embryos.

Dizygotic Twins

Also known as fraternal twins, are two siblings born at the same time as a result of two different eggs being fertilized by two different sperm cells, sharing 50% of their DNA.