Which of the Following Amortization Policies Is Correct for a Capital

question 39

Multiple Choice

Which of the following amortization policies is correct for a capital lease of both land and buildings that transfers title or contains a bargain purchase option?

• A) The total capitalized cost of the lease less any expected residual value is allocated over the expected economic life of the assets.
• B) The total capitalized cost of the lease less any expected residual value is allocated over the lease term.
• C) An amount is assigned to Leased Buildings that is depreciated over the lease term, and the amount assigned to Leased Land is not depreciated.
• D) An amount is assigned to Leased Buildings that is depreciated over the expected economic life of the asset, and the amount assigned to Leased Land is not depreciated.