The Capital Lease Method Is Appropriate When the Lessee Enjoys

question 118

Multiple Choice

The capital lease method is appropriate when the lessee enjoys most of the _____ and bears most of the _____ of ownership.

• A)risks; rewards
• B)rewards; risks
• C)cash receipts; cash disbursements
• D)cash disbursements; cash receipts
• E)cash receipts; risks

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Definitions:

Fair Value

The estimated market price of an asset or liability, reflecting the amount for which it could be exchanged in a current transaction between willing parties.

Impaired

Refers to a reduction in the recoverable value of a fixed asset or goodwill below its carrying amount on the balance sheet.

Asset Retirement Obligations

Legal obligations associated with the retirement of a tangible long-lived asset that a company must settle.

Expected Present Value

A financial metric that estimates the present value of future cash flows, adjusted for risk, and the time value of money.