Which Statement Is Not True

question 101

Multiple Choice

Which statement is not true?

• A)If a lease is a capital lease because of a bargain purchase option, the leased asset should be depreciated over the life of the asset, not the life of the lease.
• B)The lessee ignores unguaranteed residual value in the measurement of the lease obligation.
• C)If there is a bargain purchase option, the lessor does not consider an unguaranteed residual value in measuring the lease receivable at the date of lease signing.
• D)In direct financing leases, the net investment in the lease should be adjusted each year by material changes (increases or decreases)in estimated unguaranteed residual values.

---

Definitions:

Estimated Value

An approximation of the monetary worth of an asset, liability, or a business, determined through analysis or professional judgment.

Fixed Asset

Long-term tangible property owned by a business, used in its operations and not expected to be consumed or converted into cash in the short term.

Acquisition Cost

The total cost incurred to acquire an asset, including the purchase price and all other expenses necessary to bring the asset to its intended use.

Equipment

Tangible assets used in the operation of a business, such as machinery, computers, and furniture, which are not intended for sale.