The Appropriate Valuation of an Operating Lease on the Balance

question 21

Multiple Choice

The appropriate valuation of an operating lease on the balance sheet of a lessee is:

• A) the present value of the sum of the lease payments discounted at an appropriate rate.
• B) the market value of the asset at the date of the inception of the lease.
• C) the absolute sum of the lease payments.
• D) zero unless the lessee made a prepayment of rent.

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Definitions:

Boomerang Effect

A phenomenon where an attempt to persuade or change a belief has the opposite effect, reinforcing the original belief or behavior.

Negative Attitude Change

A shift in a person's feelings and dispositions from positive or neutral to negative towards an object, person, or situation.

Halo Effect

A cognitive bias where the perception of one positive characteristic influences the assumption of other positive traits in the same individual.

Sleeper Effect

A phenomenon where a message that initially has little impact becomes more persuasive over time, typically because of a delay in the message's perceived importance or credibility.