If a Sale and Leaseback Transaction Results in a Finance

question 3

Multiple Choice

If a sale and leaseback transaction results in a finance lease,any excess of sales proceeds over the carrying amount shall:

• A)be deferred but not amortised over the lease term
• B)be immediately recognised as an expense by a seller- lessee
• C)not be immediately recognised as income by a seller- lessee
• D)be immediately recognised as income by a seller- lessee

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Definitions:

Automobile Industry

A sector that encompasses companies involved in the design, manufacture, marketing, and selling of motor vehicles.

Household Appliance Industry

The sector of the economy focused on manufacturing and selling electrical or mechanical machines used in homes, such as refrigerators, washers, or ovens.

Differentiated Oligopoly

A market structure where a few companies dominate the market, but they offer products that are distinct from each other in some way, allowing for competition.

Pure Competition

A market structure characterized by a large number of buyers and sellers, similar products, and free entry and exit, leading to price determination by supply and demand forces.