Which of the Following Meets the Criteria for a Capitalized

question 83

Multiple Choice

Which of the following meets the criteria for a capitalized lease under GAAP in the U.S.?

• A)The present value of the future minimum payments is $90,000 and the fair value is $110,000.
• B)The lessee can purchase the asset for an amount that is greater than fair vale at the end of the lease.
• C)The lease term is ten years and the useful life of the asset is 11 years.
• D)Title does not transfer by the end of the lease term.

---

Definitions:

Extra Utility

The additional satisfaction gained from consuming one more unit of a good or service.

Production Possibilities Curve

A graph that depicts the maximum feasible amounts of two commodities that a business can produce when those commodities compete for limited resources.

Technological Advance

The process of developing new technologies or improving existing ones to increase productivity or solve problems.

Soil Fertility

The ability of soil to provide essential nutrients to plants in adequate amounts for growth.