If the Asset in Question 64 Were Exactly Equal to Its

question 23

Multiple Choice

If the asset in Question 64 were exactly equal to its undepreciated capital cost instead of zero, what effect would this change have on the financial lease analysis?

• A)The salvage would become a benefit of leasing
• B)The change would have no effect on the lease analysis
• C)The terminal loss would disappear and that would be the only change
• D)The terminal loss would disappear and the salvage is now a leasing cost

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Definitions:

GAAP

Commonly adhered to accounting rules and standards for financial reporting, known as Generally Accepted Accounting Principles.

Merchandise On Account

Goods that have been purchased but not yet paid for, often resulting in an accounts payable for the buyer.

Sales Allowance

A reduction in the selling price of goods or services, typically granted to customers for various reasons like minor defects or dissatisfaction.

Partial Derecognition

The process in accounting where only a portion of a financial asset or liability is removed from the balance sheet.