An Airline Has the Following Data About an Airplane: Annual

question 173

Multiple Choice

An airline has the following data about an airplane: Annual lease cost $10,000,000
Lease term: 20 years
Useful life of airplane: 25 years
Fair market value of leased asset: $85 million
Present value of lease payments: $75 million
Bargain purchase option: None
Transfer to lessor at end of lease? Yes
Is this a capital or operating lease and why?

• A)This is an operating lease.It fails all the capital lease tests.
• B)This is a capital lease because the substance of the transaction is a capital lease.
• C)This is a capital lease because it meets at least one of the four tests.
• D)This is a capital lease because the leased asset costs over $1 million.

---

Definitions:

Secure Attachment Style

A pattern of attachment characterized by trust in the availability and responsiveness of one's partner in close relationships, leading to positive expectations for support.

Relationships

The way in which two or more concepts, objects, or people are connected, or the state of being connected.

Dimensional Approach

A method of categorizing characteristics or conditions on a continuous spectrum rather than as distinct and separate entities.

Anxiety

A feeling of worry, nervousness, or unease, typically about an imminent event or something with an uncertain outcome.