Under ASPE, Which Statement Is Correct for the Lessee

question 24

Multiple Choice

Under ASPE, which statement is correct for the lessee?

• A)If the present value of the minimum lease payments exceeds the fair value of the leased asset, the asset will be recorded on the balance sheet at the higher amount.
• B)If the present value of the minimum lease payments exceeds the fair value of the leased asset, the asset will be recorded on the balance sheet at the fair value amount.
• C)If the present value of the minimum lease payments is lower that the fair value of the leased asset, the asset will be recorded on the balance sheet at the unguaranteed residual value amount.
• D)If the present value of the minimum lease payments is lower that the fair value of the leased asset, the implicit rate must be used.

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Definitions:

Statement of Cash Flows

A document that outlines the effects of changes in accounts on the balance sheet and revenue on cash and cash equivalents, categorized by operating, investing, and financing actions.

Financial Statement

Documents that provide an overview of a company’s financial condition, including balance sheet, income statement, and cash flow statement.

Cash Receipts

The collection of cash during a specific period, often recorded in financial accounting to track the inflow of cash.

Financing Activity

Transactions that result in changes in the size and composition of the equity capital or borrowings of a company.