Which Statement Is Correct for the Lessee

question 51

Multiple Choice

Which statement is correct for the lessee?

• A)If the minimum lease payments exceed fair value of the leased asset,the asset will be recorded on the balance sheet at the higher amount.
• B)If the minimum lease payments exceed fair value of the leased asset,the asset will be recorded on the balance sheet at the fair value amount.
• C)If the minimum lease payments are lower that the fair value of the leased asset,the asset will be recorded on the balance sheet at the unguaranteed residual value amount.
• D)If the minimum lease payments are lower that the fair value of the leased asset,the implicit rate must be used.

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Definitions:

Revenue Decrease

A decline in the amount of money received from sales or services over a certain period.

Ethanol Imported

Refers to ethanol (a biofuel) that is bought from foreign producers and brought into a country’s borders, often used as an additive in gasoline.

Consumer Surplus

The contrast between the total expenditure consumers are willing to make on a good or service and the total expenditure they actually make.

Producer Surplus

The difference between what producers are willing to sell a good for and the actual price they receive, representing profit.