Which of the Following Is Not a Criterion of a Capital

question 30

Multiple Choice

Which of the following is not a criterion of a capital lease?

• A) The lease transfers ownership of the property to the lessee by the end of the lease term.
• B) The present value of the minimum lease payments equals or exceeds 90 percent of the fair value of the leased property, net of lessor's investment tax credit.
• C) The lease contains an option to purchase the leased property at a bargain price.
• D) The lease contains an option to renew.
• E) The lease term is equal to or greater than 75 percent of the estimated economic life of the leased property.

Recognize the valuation techniques prescribed by AASB 13.

Identify and differentiate between Level 1, 2, and 3 inputs.

Understand the principles guiding the determination of the fair value.

Know the definition of the principal market and its significance in fair value measurement.

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Definitions:

Cell Phone

A portable telephone that uses wireless technology to send and receive calls and data.

Demand Curve

A graph showing the relationship between the price of a good or service and the quantity of it that consumers are willing to purchase at different prices.

Price Sensitivity

The degree to which the demand for a product is affected by changes in its price.

Vertical

Refers to the integration of multiple stages of production and distribution within the same company.