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:

Diminishing Marginal Returns

A rule indicating that when increasing amounts of a variable input are introduced to a constant input, the output gained from each subsequent unit of input will ultimately diminish.

Total Product

The total quantity of goods or services produced by a firm or economy during a specific period.

Marginal Product

The additional output that is produced by adding one more unit of a specific input, while holding all other inputs constant.

Total Product

The entire quantity of output or goods produced by a firm, given its current inputs.