A Lessee Is Attempting to Circumvent the Accounting Rules, Which

question 81

Multiple Choice

A lessee is attempting to circumvent the accounting rules, which require lease capitalization.Which of the following is most likely to lead to classification of a lease as an operating lease for the lessee?

• A)increase the term of the lease.decrease annual executory costs
• B)attempt to reduce the lessee's borrowing rate
• C)contract provides for a third-party guarantee of residual value
• D)contract provides that lessee pays executory costs

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Definitions:

Transferring Employees

The process of assigning employees to different tasks, positions, or locations within an organization.

Pay Differential

The difference in payment rates based on factors such as job function, location, or hours worked.

Market Forces

Economic factors that influence the supply, demand, and pricing of goods and services without direct governmental intervention.

Exempt Employees

Managers, outside salespeople, and any other employees not covered by the FLSA requirement for overtime pay.