When Is a Lease Recognized as an Operating Lease Under

question 5

Multiple Choice

When is a lease recognized as an operating lease under ASPE?

• A) if it is of low-value to the corporation
• B) if it is less than one year
• C) if it doesn't meet the criteria of a capital lease
• D) if the company elects to record as an operating lease

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Definitions:

Dividends

Payments made by a corporation to its shareholders from its profits or reserves, usually in the form of cash or additional shares.

Recognized Gain

An increase in the value of an asset that has been sold or deemed to have increased in value officially on financial statements.

Selling Price

The amount for which a product or service is sold, not necessarily equal to the cost or intrinsic value of the item.

Carrying Value

The book value of an asset or liability on a company's balance sheet, calculated as the original cost minus depreciation or amortization.