Which One of the Following Is an Indicator That a Lease

question 45

Multiple Choice

Which one of the following is an indicator that a lease is an operating lease for accounting purposes?

• A) The lease transfers ownership of the asset to the lessee by the end of the lease term.
• B) The lessee will probably exercise the option to purchase the leased asset.
• C) The lease term represents a minor portion of the leased asset's economic life.
• D) The residual value plus the present value of the lease payments exceeds the value of the leased asset.
• E) The lessor has no use for the asset other than to lease it to the present lessee due to the specialized nature of that asset.

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Definitions:

Injustice

A situation or action that is perceived as unfairly treating a person or group, violating their rights or moral principles.

Enforceable Contract

A legal agreement that is binding and can be upheld in court due to its fulfilment of necessary legal conditions.

Contractual Conditions

Contractual conditions are specific provisions or stipulations within a contract that must be met for the contract to be legally binding or for certain actions to be taken.

Expressly Inserted

Included specifically and clearly in a contract or document.