USGAAP and IFRS Provide Criteria for Distinguishing Operating Leases from Capital

question 137

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 an operating lease.
• D)IFRS provides more general criteria for identifying the entity enjoying the rewards and incurring the risk.
• E)Firms cannot currently apply the fair value option to capital leases

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Definitions:

Boiling Point

The temperature at which a liquid turns to vapor at a given pressure, characteristic for every substance.

Molecular Mass

The sum of the atomic masses of all the atoms in a molecule, measured in atomic mass units (amu).

Alkenes

Unsaturated hydrocarbons containing at least one carbon-carbon double bond.