For a Leased Asset Under a Lease That Qualifies as a Capital

question 21

Multiple Choice

For a leased asset under a lease that qualifies as a capital lease because of a bargain purchase option,the depreciation period used by the lessee must be:

• A)The same period that was used by the lessor.
• B)The useful life to the lessee.
• C)The term of the lease regardless of the lease provisions.
• D)The remaining life of the asset at the time the lease agreement took effect.

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Definitions:

Factory Overhead Cost Variance

The difference between the actual factory overhead costs incurred and the expected (or budgeted) overhead costs based on standard cost accounting.

Flexible Factory Overhead Budget

A budget that adjusts overhead costs in response to changes in actual production or activity, allowing for more accurate costing.

Direct Materials Price Variance

The difference between the actual price and the standard price of direct materials multiplied by the actual quantity of direct materials used in producing a product.

Units

In business and accounting, units refer to the individual pieces or quantities of a product or service.