For a Sales-Type Lease, Cost of Asset Leased Is Valued

question 47

Multiple Choice

For a sales-type lease, cost of asset leased is valued by the lessor at

• A) the recorded cost assigned to the inventory less the present value of the guaranteed residual value of the leased property accruing to the benefit of the lessor.
• B) the recorded cost assigned to the inventory less the undiscounted value of the unguaranteed residual value of the leased property accruing to the benefit of the lessor.
• C) the recorded cost assigned to the inventory less the present value of the unguaranteed residual value of the leased property accruing to the benefit of the lessor.
• D) the recorded cost assigned to the inventory less the undiscounted value of the guaranteed residual value of the leased property accruing to the benefit of the lessor.

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Definitions:

Direct Labor Costs

Expenses associated with employees who are directly involved in the production of goods or services.

Work in Process

Inventory that includes partially completed goods that are still in the production process.

Wages Payable

An account that records the amounts owed to employees for work performed that has not yet been paid.

Factory Overhead

All indirect costs associated with the production process, such as maintenance, utilities, and management salaries, not directly tied to specific units of product.