Refer to the Following Lease Amortization Schedule

question 181

Multiple Choice

Refer to the following lease amortization schedule. The 10 payments are made annually starting with the beginning of the lease. Title does not transfer to the lessee and there is no purchase option or guaranteed residual value. The asset has an expected economic life of 12 years. The lease is noncancelable.

-If the lessor retains title to leased property under the terms of the lease:

• A) The amount to be recovered through periodic lease payments is reduced by the present value of any residual amount.
• B) The amount to be recovered through periodic lease payments is increased by the present value of the residual amount.
• C) The amount to be recovered will be the same as if there were no residual value.
• D) The lessor will record a greater amount of depreciation due to the residual value.

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Definitions:

Mammogram

An X-ray of the breast.

Discolored

Changed in color in a way that is less attractive or indicates damage or decay.

Breast Tissue

The fibrous, glandular, and fatty tissue that makes up the breasts, essential for milk production and delivery in females.

Barium Enema

A diagnostic test that involves filling the colon with barium contrast material to make the lower gastrointestinal tract visible on an X-ray.