On January 1,2016,Gibson Corporation Entered into a Four-Year Operating Lease

question 76

Multiple Choice

On January 1,2016,Gibson Corporation entered into a four-year operating lease.The payments were as follows: $20,000 for 2016,$18,000 for 2017,$16,000 for 2018,and $14,000 for 2019.What is the correct amount of lease expense for 2017?

• A)$20,500.
• B)$19,000.
• C)$17,000.
• D)$18,000.

Determine the relationship between sales growth and various financial statement items.

Understand the concept of the capital intensity ratio and its significance in financial analysis.

Apply the percentage of sales method to estimate future financial statement values.

Interpret the Du Pont identity in the context of return on equity (ROE) analysis.

---

Definitions:

Operating Lease

A lease agreement allowing the use of an asset without ownership, typically with shorter terms than a finance lease.

Asset-Based Loan

An asset-based loan is a type of lending, often secured by a company's assets, where the loan amount is based on a percentage of the value of those assets.

Operating Lease

A contract that allows for the use of an asset but does not convey ownership rights of the asset to the lessee.

Risk Of Obsolescence

The risk that a product or service becomes outdated and undesired due to new technologies or changes in consumer preferences.