From the Lessor's Standpoint, All of the Following Statements Are

question 32

Multiple Choice

From the lessor's standpoint, all of the following statements are true regarding leasing except that

• A) the lease provides a method of indirectly making a sale
• B) if the residual value of the asset is not guaranteed, the lessor has transferred the risks of residual value decreases to the lessee
• C) for sales-type lease agreements, the lessor earns interest in addition to profit from the transfer of the asset
• D) the accounting procedures used by a lessor for a sales-type lease are similar to the accounting procedures used for a normal sale of merchandise under a perpetual inventory system

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Definitions:

Service Cost

The actuarial present value of benefits earned by employees during a given period, included in the calculation of pension expense.

Actuarial Present Value

A calculation used to determine the present value of a future series of payments or receipts, taking into account variables such as mortality, investment earnings, and expense risks.

Net Periodic Pension Cost

The net periodic pension cost is the total expense recognized in a period related to an employer's pension plan, including service costs, interest costs, expected returns on plan assets, and any amortizations.