Assume the Initial Present Value of the Payments on a Lease

question 19

Multiple Choice

Assume the initial present value of the payments on a lease are equal to the cost of the leased asset. This capital lease is recorded as an asset on the balance sheet of the lessee in an amount equal to the:

• A) dollar amount of each lease payment multiplied by the total number of lease payments in the original agreement.
• B) dollar amount of each lease payment multiplied by the number of lease payments remaining.
• C) dollar amount of each lease payment multiplied by the number of lease payments per year.
• D) present value of the remaining lease payments.
• E) lesser of the present value of the remaining lease payments or the present value of the lease payments for a one-year period.

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Definitions:

Independence Of Errors

Pertains to a condition in statistical analyses where the errors of a model’s predictions are not correlated with each other.

First-Order Autocorrelation

The correlation between sequential observations in a time series, specifically between each observation and its immediate predecessor.

Durbin-Watson Statistic

A measure used in statistics to detect the presence of autocorrelation in the residuals from a linear regression analysis.

Hypotheses

Proposed explanations for a phenomenon, set forth as a basis for empirical testing.