Which of the Following Lease Conditions Would Result in a Capital

question 157

Multiple Choice

Which of the following lease conditions would result in a capital lease to the lessee?

• A)The lessee will return the property to the lessor at the end of the lease term.
• B)The lessee can purchase the property for $1 at the end of the lease term.
• C)The fair market value of the property at the inception of the lease is $18,000;the present value of the minimum lease payments is $15,977.
• D)The lease term is 70% of the property's economic life.

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Definitions:

Safety Stock

Inventory kept on hand to protect against variability in demand or lead time.

Average Inventory

The mean stock level held by a business over a certain period of time, calculated to manage and evaluate inventory efficiently.

Aggregate Supply Curve

A graph showing the relationship between the total output produced by an economy and the price level for output, over a period.

Actual Price Level

The current index of prices for goods and services, reflecting inflation or deflation in an economy.