All of the Following Statements Are True with Regard to How

question 47

Multiple Choice

All of the following statements are true with regard to how the statement of financial position will be similarly affected by leasing the assets as opposed to issuing bonds and purchasing the assets, except which statement?

• A)Since a long-term, non-cancelable lease which is used as a financing device generally results in the capitalization of the leased assets and recognition of the lease commitment in the statement of financial position, the comparative effect is not very different from purchase and ownership.
• B)Assets leased under finance leases would be capitalized at the present value of the future lease payment, which is somewhat equivalent to the purchase price of the assets.
• C)Bonds sold at par would be nearly equivalent to the present value of the future lease payments.
• D)The specific accounts affected by the transactions would be the same.

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Definitions:

Ad Substantiation

An FTC standard requiring advertisers to have a reasonable basis for the claims made in their ads.

Reasonable Basis

A justification or foundation for belief or action that is considered fair or sensible under given circumstances.

Claims

Demands for something due or believed to be due, typically used in the context of legal or insurance disputes.

Consent Order

A statement in which a company agrees to stop disputed behavior but does not admit that it broke the law.