USGAAP and IFRS Provide Criteria for Distinguishing Operating Leases from Capital

question 57

Multiple Choice

U.S.GAAP and IFRS provide criteria for distinguishing operating leases from capital leases.Which of the following is not true?

• A)The criteria attempt to identify the entity, whether lessor or lessee, that enjoys the benefits and incurs the risk of the leased asset.
• B)When the lessor enjoys the benefits and bears the risk, the lease is an operating lease.
• C)When the lessee enjoys the benefits and bears the risk, the lease is a capital lease.
• D)IFRS provides more general criteria for identifying the entity enjoying the rewards and incurring the risk.
• E)Firms can currently apply the fair value option to capital leases

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Definitions:

Equilibrium Price

The market price at which the quantity of goods supplied is equal to the quantity of goods demanded, resulting in no excess supply or demand.

Willing To Pay

The maximum amount a consumer is prepared to spend on a good or service, reflecting their valuation and demand.

Maximum Prices

Price caps set by the government on certain goods and services to protect consumers from excessive prices.

Producer Surplus

The difference between what producers are willing to accept for a good or service and the actual price they receive.