In a Finance Lease, the Amount Capitalized Is the

question 156

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 lease payments.
• D) future value of the asset as of the lease termination date.

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Definitions:

Normal Balance

The side of an account (debit or credit) where increases are recorded, depending on the account type (asset, liability, equity, revenue, expense).

Temporary/Permanent

In accounting, this distinction categorizes accounts based on their persistence; temporary accounts reset each cycle, while permanent accounts carry their end balance into the next period.

Accrued Interest

Interest that has been incurred but not yet paid, often associated with bonds and loans.

Note Payable

A financial liability representing a written promissory note to pay a specific sum of money to another entity on a specific future date or on demand.