Which Type of Lease Will Not Increase a Company's Assets

question 1

Multiple Choice

Which type of lease will not increase a company's assets or liabilities?

• A) a finance lease
• B) an operating lease
• C) a lease in which title is transferred to the lessee at the end of the lease term
• D) the present value of lease payments is 90% or more of the market value of the leased asset

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Definitions:

Par Value

The nominal or face value of a bond, share of stock, or another financial instrument, as stated by the issuing company.

Fair Value

The capital acquired from the sale of an asset or expended in the transfer of a liability in a smooth transaction among market intermediaries on the measurement date.

Acquisition

The process by which one company takes over the control of or purchases another company.

Appraised Value

An estimate of the fair value of an asset, determined by a professional appraiser based on inspection and analysis of the asset and market conditions.