All of the Following Statements Are True with Regard to How

question 72

Multiple Choice

All of the following statements are true with regard to how the statement of financial position will be similarly affected by leasing the assets as opposed to issuing bonds and purchasing the assets, except which statement?

• A)since a long-term non-cancelable lease which is used as a financing device generally results in the capitalization of the leased assets and recognition of the lease commitment in the statement of financial position, the comparative effect is not very different from purchase and ownership.
• B)Assets leased under finance leases would be capitalized at the present value of the future lease payment, which is somewhat equivalent to the purchase price of the assets.
• C)Bonds sold at par would be nearly equivalent to the present value of the future lease payments.
• D)The specific accounts affected by the transactions would be the same.

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Definitions:

Excise Tax

A tax on specific goods or activities, often included in the price of products like alcohol, tobacco, and gasoline, used by governments to raise revenue.

American Republic

A term referring to the United States of America, emphasizing its form of government as a republic.