A Noncancelable Lease Contains an Option to Purchase a Leased

question 123

Multiple Choice

A noncancelable lease contains an option to purchase a leased asset at a price that is sufficiently lower than the asset's expected fair value so that the exercise of the option appears reasonably certain. The fair value of the asset exceeds the lessor's cost of the asset. Therefore, the lease will be accounted for by the lessor as a(n) :

• A) Sales-type lease.
• B) Financing lease.
• C) Operating lease.
• D) Guaranteed lease.

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Definitions:

Standard Deviation

An index of how much individual observations of a dataset vary from the dataset's mean.

Lower Control Limit

The lowest boundary of acceptable performance in a statistical quality control chart, below which a process is considered out of control.

Assignable Causes

Specific, identifiable factors leading to variations in a process or system, as opposed to random variations.

Variation

The degree to which data points in a statistical distribution or dataset differ from each other and from the mean of the set.