In a Finance Lease, the Amount Capitalized Is the

question 5

Multiple Choice

In a finance lease, the amount capitalized is the

• A) sum of the lease payments over the life of the lease.
• B) fair value of the leased asset on the date the lease is signed.
• C) present value of the future lease payments.
• D) future value of the asset as of the lease termination date.

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Definitions:

Land

A natural resource that refers to the earth's surface not covered by water, which can be used for agriculture, construction, or as an investment.

Insurance

A financial product that provides protection against losses or damages, typically in the form of a policy for which the insured pays a premium.

Residual Value

The calculated estimate of what an asset will be worth when it reaches the end of its functional life.

Straight-Line Depreciation

Straight-line depreciation is a method of allocating the cost of a tangible asset over its useful life in equal annual amounts.