Which of the Following Is NOT a Requirement of a Capital

question 21

Multiple Choice

Which of the following is NOT a requirement of a capital lease?

• A) There is no transfer of ownership at the end of the lease.
• B) The agreement has a bargain purchase option.
• C) The lease must cover at least 75% of asset's useful life.
• D) The present value of lease payments must be 90% or more of market value of asset.
• E) The present value of lease payments equals substantially all of the fair value of the leased property at the inception of the lease.

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Definitions:

Externally Supplied

Refers to goods, services, or resources that are provided by external entities or suppliers outside of the organization.

Sales Forecast

An estimation of the sales revenue a company expects to achieve in a future period under a given set of conditions.

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