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Under FASB Rules, If the Present Value of the Minimum

question 14

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Under FASB rules, if the present value of the minimum lease payments is over 90% of the fair value of the leased property, the lessee must classify this as an "operating" lease.


Definitions:

Retail Cost

The total price at which a product is sold to the end consumer, including costs of production, distribution, and a profit margin.

Markup on Selling Price

The amount added to the cost price of goods to cover overhead and profit, calculated as a percentage of the selling price.

Selling Price

The amount at which something is sold, determining how much a buyer pays and a seller receives.

Markup on Cost

A pricing method where a preset percentage is added to the cost of a product to determine its selling price, often to cover overhead and profit margins.

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