Which of the Following Is NOT a Criterion for Classifying

question 60

Multiple Choice

Which of the following is NOT a criterion for classifying a lease as a finance lease, from the lessee's point of view?

• A) The lease payments are more frequent than annually.
• B) Title to the lease passes to the lessee at the end of the lease.
• C) The lease term is for a major portion of the asset's economic life.
• D) Present value of the minimum lease payments is equal to substantially all of the FV of the asset.

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Definitions:

Times Interest Earned

A ratio that measures a company's ability to meet its debt obligations, calculated by dividing earnings before interest and taxes by the interest expense.

Debt-To-Equity Ratio

A financial ratio indicating the relative proportion of shareholder's equity and debt used to finance a company's assets.

Equity Multiplier

A financial leverage ratio that measures the portion of a company`s assets that are financed by its shareholders' equity.

Price-Earnings Ratio

A valuation ratio comparing a company’s current share price to its per-share earnings, helping investors evaluate if a stock is over or under-valued.