What Is a "Disposal Group

question 27

Multiple Choice

What is a "disposal group"?

• A)A component of an entity that either has been disposed of or is classified as held for sale.
• B)A group of assets and liabilities to be disposed of together in a single transaction.
• C)A component with operations and cash flows distinguishable from the rest of the entity.
• D)A group of current assets that will be recovered through sale rather than continuing use.

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Definitions:

Capitalized Lease

A lease arrangement that is recorded as an asset on the lessee's balance sheet, indicating that the lessee assumes some of the risks and benefits of ownership.

Fair Market Value

The price at which an asset would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or sell and both having reasonable knowledge of relevant facts.

Minimum Lease Payments

Minimum lease payments are the lowest amount that a lessee is obligated to pay over the lease term, including fixed payments, variable rent, guarantees, and residual value assurances.

Incremental Borrowing Rate

The interest rate a company would have to pay if it borrows funds on the day of the lease transaction, used in lease accounting.