While Only Certain Leases Are Currently Accounted for as a Sale

question 170

Multiple Choice

While only certain leases are currently accounted for as a sale or purchase,there is theoretical justification for considering all leases to be sales or purchases.The principle reason that supports this idea is that:

• A) a lease reflects the purchase or sale of a quantifiable right to the use of the property.
• B) during the life of the lease, the lessee can effectively treat the property as if it were owned by the lessee.
• C) all leases are generally for the economic life of the property and the residual value of the property at the end of the lease is minimal.
• D) at the end of the lease, the property usually can be purchased by the lessee.

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Definitions:

Visibility

The degree to which an individual's actions, position, or status can be seen and recognized by others, influencing perceptions and opportunities.

Substitutability

The extent to which one product, service, or input can replace another in usage, offering an alternative choice to consumers or producers.

Legitimate Power

The authority that an individual or group possesses as a result of their role or position within an organization or society.

Formal Authority

The power granted to an individual or organization by virtue of position or role, allowing them to make decisions and enforce rules.