Which of the Following Facts Would Preclude a Lessor from Classifying

question 75

Multiple Choice

Which of the following facts would preclude a lessor from classifying a lease as a sales-type or direct financing lease?

• A) The undiscounted sum of the minimum lease payments is 90% of the fair value of the leased property to the lessor.
• B) The collectability of the minimum lease payments is reasonably assured.
• C) The lease term is 90% of the estimated economic life of the leased property.
• D) No important uncertainties exist about non-reimbursable costs yet to be incurred by the lessor.

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Definitions:

Disposal Cost

Expenses associated with the process of disposing of waste, obsolete inventory, or equipment, including transportation, recycling, or landfill fees.

Revenue Retrieval

The process of getting back revenue that has been lost or unaccounted for through various recovery efforts or strategies.

Resale Revenue

Income generated from selling goods or services that were previously purchased.

Recycling Revenue

Income generated from selling recyclable materials that have been collected, processed, and remanufactured into new products.