What Amount of Sales Is Recognized by the Lessor in a Sales

question 151

Multiple Choice

What amount of sales is recognized by the lessor in a sales type lease when the residual value is guaranteed?

• A) Market value of the asset leased.
• B) Cost of asset leased.
• C) Market value of asset leased less present value of guaranteed residual value.
• D) Cost of asset leased less present value of guaranteed residual value.

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Definitions:

Total Surplus

The sum of consumer surplus and producer surplus in a market, representing the total net benefit to society.

Equilibrium Price

The price at which the quantity of a good demanded by consumers equals the quantity supplied by producers, leading to market stability.

Equilibrium Quantity

The amount of goods or services that are bought and sold at the equilibrium price, where market demand meets market supply.

Consumer Surplus

The discrepancy between the total sum consumers are prepared and able to spend on a good or service and what they ultimately pay.