Which of the Following Conditions Will NOT Cause a Lease

question 3

Multiple Choice

Which of the following conditions will NOT cause a lease to be categorized as a capital lease?

• A)It extends for at least 90 percent of the asset's life
• B)It transfers ownership to the lessee at the end of the lease term
• C)It seems likely that ownership will be transferred to the lessee at the end of the lease term because of a "bargain purchase" option
• D)The present value of the contractual lease payments equals or exceeds 90 percent of the fair market value of the asset at the time the lease is signed

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Definitions:

Marginal Opportunity Cost

The loss of potential gain from other alternatives when one alternative is chosen, especially in the context of resource allocation.

Production Possibilities Schedule

A table that shows the different combinations of two goods that can be produced with fixed resources and technology.

Tanks

Armored combat vehicles with heavy firepower and strong defensive capabilities, primarily used by military forces in ground warfare.

Opportunity Cost

The cost of foregone alternatives, or what is given up in order to pursue a certain action or decision.