An Owner of an Asset May Sell It and Then

question 5

True/False

An owner of an asset may sell it and then lease it back from the new owner.Where this lease meets the conditions to be classified as a finance lease,the profit or loss on the sale of the asset recorded by the lessee should be classified as a finance item in the statement of comprehensive income in the year of the sale.

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Definitions:

Desired Profit

The predetermined profit that a company aims to achieve at the end of a specific period.

Total Cost Method

An accounting method where the total costs of producing goods or services are calculated, including both direct and indirect costs.

Target Costing

A pricing strategy in which the selling price of a product is determined first, and then the allowable cost of manufacturing the product is calculated by subtracting a desired profit margin.

Cost-Reduction Emphasis

A strategic focus of an organization on identifying and implementing ways to decrease expenses and costs to improve profitability.