Which of the Following Are Specific Tests That the Canada

question 92

Multiple Choice

Which of the following are specific tests that the Canada Revenue Agency will apply to determine if a particular lease meets the definition of a capital lease? 1.The lease term is equal to 75% or more of the economic life of the leased property.
2) The present value of the minimum lease payments is equal to 70% or more of the fair value of the leased property at the inception of the lease.
3) Provisions are made such that ownership of the leased property is transferred to the lessee at the end of the lease term.

• A)1 only
• B)1 and 2
• C)1 and 3
• D)2 and 3

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Definitions:

Financial Statements

Formal records that outline the financial activities and condition of a business, individual, or other entity.

Common Shares

Equity shares that represent ownership in a company, giving holders voting rights and a claim on a portion of the company's profits through dividends.

Fixed Asset Turnover Ratio

A financial indicator that measures a company's ability to generate net sales from fixed-asset investments, specifically property, plant, and equipment.

Financial Statements

Official documentation detailing the financial transactions and status of an entity, such as a company or individual, usually comprising a balance sheet, income statement, and statement of cash flows.