GAAP Requires the Lessee Party to a Capital Lease

question 1

Multiple Choice

GAAP requires the lessee party to a capital lease

• A) to record the lease on its balance sheet at the present value of future lease payments.
• B) to record rental revenue as each lease payment is received.
• C) to depreciate the leased asset.
• D) to transfer ownership to the lessee.

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Definitions:

Appreciate

Appreciate, in economic terms, refers to an increase in the value of an asset or currency.

Exchange Rate

is the value of one currency for the purpose of conversion to another.

Euro

The recognized form of money in the eurozone, utilized by 19 of the 27 countries that are part of the European Union.

Nominal Exchange Rate

The exchange rate at which the currency of one nation can be exchanged for the currency of another nation, without considering inflation adjustments.