From the Perspective of the Lessor, Which Statement Is Correct

question 35

Multiple Choice

From the perspective of the lessor, which statement is correct respecting the criteria for determining whether a lease is an operating or a finance lease?

• A)Substantially all of the risks and rewards of ownership have been transferred from the lessee to the lessor.
• B)There is a transfer of ownership to the lessee or a bargain purchase option (BPO)at the end of the lease.
• C)The lease term is a minor part of the economic life of the asset.
• D)The present value of the lease payments is greater than 50% fair value of the leased asset.

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Definitions:

Per-Unit Cost

The cost associated with producing or acquiring one unit of a product or service, calculated by dividing the total cost by the number of units.

Profit-Maximizing Output

The level of production at which a company can make the highest profit, considering the cost of production and market price.

Maximum Profit

The highest possible financial gain that can be achieved from business activities after all costs are subtracted.

Market Price

The current price at which an asset or service can be bought or sold in a marketplace.