All of the Following Statements Are True Regarding the Circumvention

question 40

Multiple Choice

All of the following statements are true regarding the circumvention of accounting rules for leases when determining whether a lease qualifies as an operating or capital lease except

• A)the residual value guarantee is a device used by lessees and lessors by transferring some of the risk to a third party to convert financing leases to operating leases.
• B)the lessee who does not know exactly the lessor`s implicit interest rate might use a different (higher) incremental borrowing rate.
• C)lessors typically try to avoid having lease arrangement classified as operating leases.
• D)lessors typically try to avoid having lease arrangement classified as finance leases.

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