Which of the Following Is Not a Criterion for Defining

question 40

Multiple Choice

Which of the following is not a criterion for defining a lease as a capital lease?

• A) Ownership is transferred by the end of the lease agreement.
• B) The lease contains an option to purchase the asset at a bargain price.
• C) The present value of the lease payments at the beginning of the lease is 75% or more than the value of the asset.
• D) The lease term is at least 75% of the economic life of the asset.

---

Definitions:

Savings

The portion of disposable income not spent on consumption of goods and services, set aside for future use or investment.

Investment

The action of allocating resources, usually money, with the expectation of generating an income or profit.

Price Level

The average of current prices across all goods and services in an economy, indicating the overall cost of living or inflation rate.

Purchasing Power

How much goods or services one unit of currency can procure, defining the currency's value.