If the Leaseback Portion of a Sale-Leaseback Transaction Is Classified

question 18

Multiple Choice

If the leaseback portion of a sale-leaseback transaction is classified as a capital lease:

• A)Any gain is deferred and recognized as a reduction of rent expense.
• B)Any gain is deferred and recognized as a reduction of depreciation.
• C)Any gain is recognized at the lease's inception.
• D)There can be no gain.

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Definitions:

Balanced Budget

A financial situation where revenues are equal to expenditures, resulting in no deficit or surplus.

Recession

A significant decline in economic activity spread across the economy, lasting more than a few months, visible in real GDP, real income, employment, industrial production.

Constitutional Amendment

A formal change or addition to a constitution, often requiring a specific process and approval to be enacted.

Budget Surpluses

Occurs when a government's revenues exceed its expenditures during a fiscal period, leading to extra funds.