When Using the Discounted Cash Flow Approach to Lease Capitalization

question 32

Multiple Choice

When using the discounted cash flow approach to lease capitalization, how is the off-balance sheet lease obligation estimated?

• A) present value of the replacement cost of the leased asset
• B) rent expense times capitalization rate
• C) present value of the future minimum lease payments
• D) present value of the historical cost of the leased asset

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Definitions:

Percentiles

A method of comparing raw scores to a norm group by calculating the percentage of people falling below an obtained score, with ranges from 1 to 99, and 50 being the mean.

Z-Scores

A standardized score that indicates the number of standard deviations a raw score is above or below the mean.

Raw Score Distribution

The unadjusted scores of all participants in a study or on a test, displayed in the form of a distribution to analyze general trends.

Percentile Rank

A score indicating the percentage of scores in its frequency distribution that are equal to or lower than it, providing a relative position of an individual's score in a group.