Which of the Following Is a Correct Statement of One

question 119

Multiple Choice

Which of the following is a correct statement of one of the capitalization criteria?

• A) The lease transfers ownership of the property to the lessor.
• B) The lease contains a purchase option.
• C) The lease term is equal to or more than 75% of the estimated economic life of the leased property.
• D) The minimum lease payments (excluding executory costs) equal or exceed 90% of the fair value of the leased property.

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Definitions:

Mutual Agreement

A mutual agreement is an understanding or arrangement made between two or more parties, usually detailed in a formal contract.

Discharge

The release or termination of a person’s duty, debt, or obligation, effectively relieving them from responsibility.

Novation

The act of replacing one obligation with another, essentially altering the parties, terms, or obligations of a contract.

Quilt

A multi-layered textile traditionally composed of a woven cloth top, a layer of batting or wadding, and a woven back, usually stitched together.