Which of the Following Is One of the Lease Capitalization

question 1

Multiple Choice

Which of the following is one of the lease capitalization criteria under SFAS No.13?

• A)The minimum lease payments excluding executory costs)equal or exceed 90% of the fair value of the leased property
• B)The lease transfers ownership of the property to the lessor
• C)The lease contains a purchase option
• D)The lease term is equal to or more than 75% of the estimated economic life of the leased property

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Definitions:

Book Value

The net value of a company's assets minus its liabilities, often used to assess its financial position.

Common Share

A type of equity ownership in a corporation, giving shareholders voting rights and a share in the company's profits through dividends.

Par Value

The nominal value of a bond or stock as declared by the issuer, not always representing its current market price.

Journal Entries

Recorded transactions in the accounting books that track all financial activities of a business.