Under ASPE, a Lessor May Classify a Lease as a Finance

question 109

Multiple Choice

Under ASPE, a lessor may classify a lease as a finance lease if:

• A)Either the credit risk relating to the lease and lessee are normal OR the lessor's unreimbursable costs can be reasonably estimated in order to meet the finance lease criteria under ASPE.
• B)Both the credit risk relating to the lease and lessee are normal AND the lessor's unreimbursable costs can be reasonably estimated in order to meet the finance lease criteria under ASPE.
• C)The lessor's unreimbursable costs can be reasonably estimated.
• D)The credit risk relating to the lease and lessee are normal.

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Definitions:

Profit-maximizing Output

This is the level of production at which a firm achieves the highest possible profit, determined by the point where marginal cost equals marginal revenue.

Total Cost

The complete cost of production, including both fixed and variable costs, incurred by a business in producing its goods or services.

Marginal Cost

The increase in total cost that arises from producing an additional unit of output.

Lawn-mowing

The act of cutting the grass in a garden or lawn to maintain its appearance and health.