Which of the Following Criteria Would Indicate That a Lease

question 125

Multiple Choice

Which of the following criteria would indicate that a lease should be accounted for as a finance lease?

• A) The present value of the minimum lease payments is $93,500, while the fair market value of the leased asset is $100,000.
• B) The lease is for real property.
• C) The lease asset is guaranteed to revert to the lessor at the end of the lease term.
• D) The lease term is for four years, while the asset's useful life is ten years.

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Definitions:

Savings Rate

The savings rate is the proportion of disposable income that is saved by households rather than spent on consumption.

Conspicuous Consumption

The spending of money on and the acquisition of luxury goods and services to publicly display economic power or social status.

Induced Consumption

Consumer spending that increases when income rises and decreases when income falls, reflecting a direct relationship between income and consumption.

Total Consumption

The aggregate amount of goods and services consumed by individuals, households, and others in an economy during a given period.