An Airline Has the Following Data About an Airplane: Annual

question 49

Multiple Choice

An airline has the following data about an airplane: Annual lease cost $10,000,000
Lease term: 10 years
Useful life of airplane: 25 years
Fair market value of leased asset: $85 million
Present value of lease payments: $80 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 of 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.

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Definitions:

Passionate Love

An intense emotional state characterized by a powerful longing for union with another, often accompanied by physiological arousal.

Companionate Love

A form of love characterized by deep affection, friendship, and emotional intimacy, as opposed to passionate love or infatuation.

Sexual Orientation

The inherent or enduring emotional, romantic, or sexual attraction that one feels towards others, categorized by the gender of those to whom one is attracted.

Gender Identity

An individual's personal sense of their own gender, which may or may not correspond with their sex assigned at birth.