Which of the Following Statements Regarding the Calculation of the Lessee's

question 65

Multiple Choice

Which of the following statements regarding the calculation of the lessee's depreciation expense for a capital lease is true?

• A)The bargain purchase option price is deducted from the original cost capitalized, and the difference is allocated over the estimated economic life of the asset.
• B)The guaranteed residual value is deducted from the original cost capitalized, and the difference is allocated over the estimated economic life of the asset.
• C)The unguaranteed residual value is deducted from the original cost capitalized, and the difference is allocated over the term of the lease.
• D)The guaranteed residual value is deducted from the original cost capitalized, and the difference is allocated over the term of the lease.

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Definitions:

Ownership Equity

The remaining interest in the assets of a business after all debts have been subtracted, signifying the ownership stake.

Revaluation Of Land

The process of adjusting the book value of land to reflect its current market value, resulting in a change in the asset's valuation on the balance sheet.

Market Value

The price at which assets or services are currently being exchanged in the marketplace.

Accumulated Depreciation

The total amount of a company's asset value that has been expensed as depreciation since the asset was acquired.