The Way IFRS GAAP Demand That Financial Leases Be Reported

question 9

Multiple Choice

The way IFRS GAAP demand that financial leases be reported encourages firms to:

• A) Choose financial leases over outright acquisition in obtaining control over fixed resources to help increase the cash flow from operations.
• B) Choose outright acquisition over financial leases in obtaining control over fixed resources to help reduce the cash outflow from investing.
• C) Choose financial leases over outright acquisition in obtaining control over fixed resources to help hide the liability that reflects their commitment to owing the periodic lease payment for the duration of the contract.
• D) Choose strategically between a financial lease and outright acquisition in order to obtain control over fixed resources since the rules neutralize the impact of the choice on the reported earnings.

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Definitions:

Intolerance

An unwillingness to accept views, beliefs, or behaviors that differ from one's own.

Self-actualization

The actualization or achievement of one's capabilities and possibilities, seen as an inherent motivation or necessity in all individuals.

Maslow

Refers to Abraham Maslow, a psychologist known for creating Maslow's hierarchy of needs, a theory of psychological health predicated on fulfilling innate human needs.

Anthropologist

A scientist who studies human behavior, culture, evolution, and societies, both past and present, to understand the full sweep and complexity of cultures across all of human history.