Consolidation Procedures for Sales-Type Leases

question 53

Multiple Choice

Consolidation procedures for sales-type leases:

• A)​allow for the recognition of the profit or loss from the lease by the lessee at the inception of the lease.
• B)​allow for the recognition of the profit or loss from the lease by the lessor at the inception of the lease.
• C)​defer the profit or loss and then amortize it over the lessee's period of usage.
• D)​defer the profit or loss and then amortize it over the lessor's period of usage.

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Definitions:

Disposed Asset

An asset that has been sold, discarded, or otherwise disposed of by a company.

Book Value

Book value is the net value of a company's assets found on its balance sheet, calculated by subtracting liabilities from the total assets.

Trademark

A symbol, word, or phrase legally registered or established by use as representing a company or product, providing legal protection against infringement.

Exclusive Right

A legal provision that grants someone the sole permission to perform a certain action, like selling a particular product or service.