USGAAP and IFRS Provide Criteria for Distinguishing Operating Leases from Capital

question 162

Multiple Choice

U.S.GAAP and IFRS provide criteria for distinguishing operating leases from capital leases.Which of the following is/aretrue?

• A)Under the capital, or finance, lease method, the lessor records the signing of a capital lease the same as if the lessor sold the leased asset for an installment note receivable.
• B)Under the capital, or finance, lease method, the lessee recognizes interest expense on the lease liability, similar to recognizing interest expense on long-term notes or bonds.
• C)Under the capital, or finance, lease method, the lessee amortizes the leased asset, similar to recognizing depreciation on buildings and equipment.
• D)Under the capital, or finance, lease method, the lessee records the leased asset and the lease liability on the balance sheet at the present value of the contractual cash flows at the time of signing the lease.
• E)all of the above

---

Definitions:

Ova

The female reproductive cells in animals and humans, commonly referred to as egg cells.

Monozygotic (MZ) Twins

Twins that derive from a single zygote that has split into two; identical twins. Each MZ twin carries the same genetic code.

Identical Twins

Twins who develop from a single fertilized egg, hence sharing 100% of their genes, making them genetically identical.

Rh Incompatibility

A condition in which antibodies produced by the mother are transmitted to the child, possibly causing brain damage or death.