For a Sale-Leaseback Transaction for Which the Lease Qualifies as a Capital

question 69

Multiple Choice

For a sale-leaseback transaction for which the lease qualifies as a capital lease, the seller-lessee should account for any gain on the sale of the asset as

• A)a gain to be recognized immediately
• B)a gain to be deferred and amortized in proportion to the lease payments over the lease term
• C)a gain to be deferred and amortized in proportion to the amortization of the leased asset
• D)a gain to be recorded directly as an increase to Retained Earnings

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Definitions:

Processed Further

Processed Further describes materials or products that undergo additional manufacturing or development stages to add value before final sale.

Manufacturing Cycle Efficiency

A measure of the efficiency of the production process, calculated as the ratio of value-added time to the total cycle time.

Non-value-added Time

Time that does not contribute directly to the final value or quality of the product or service, often seen as a target for reduction in process improvement efforts.

Throughput Time

The elapsed time from when production is started until finished goods are shipped.