Which of the Following Conditions Would Not Be Considered by Companies

question 229

Multiple Choice

Which of the following conditions would not be considered by companies reporting under ASPE when determining if a lease should be classified as a capital lease or an operating lease?

• A) transfer of ownership
• B) a bargain purchase option
• C) the present value of the lease payments is equal to or greater than 90% of the purchase price
• D) specialized asset

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Definitions:

Overvalued

A term used to describe an asset or security whose price is believed to be higher than its intrinsic value.

Consolidated Balance Sheet

A consolidated financial report that shows the assets, liabilities, and shareholders' equity of a parent company along with its subsidiaries as though they are one entity.

Inventory

The components, items in the process of completion, and completed products which form part of a company's assets that are available or will soon be available for sale.

Fair Value

The estimated price at which an asset or liability could be traded in an orderly transaction between market participants at the measurement date.