The Lessee Must Record a Lease as an Asset If

question 103

Multiple Choice

The lessee must record a lease as an asset if the lease

• A) transfers ownership of the property to the lessor.
• B) contains a purchase option.
• C) term is 75% or more of the useful life of the leased property.
• D) payments equal or exceed 90% of the fair value of the leased property.

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Definitions:

Monopolistic Competition

A market structure characterized by many firms selling products that are similar but not identical, allowing for some degree of market power and product differentiation.

Product Differentiation

The process or strategy of distinguishing a product or service from others in the market to make it more attractive to a particular target market.

Advertising

The practice of promoting products, services, or brands through various media to attract consumer interest or engagement.

Economic Profit

The profit a firm makes after deducting both its explicit (out-of-pocket) and implicit (opportunity) costs, reflecting the total financial gain that exceeds the firm's total costs.