When a Lease Contract Does Not Transfer Title to the Lessee,there

question 3

Multiple Choice

When a lease contract does not transfer title to the lessee,there is no bargain purchase option,and the lease term is not at least 75 percent of the estimated useful life of the leased asset.

• A)The lessee must classify the lease as an operating lease.
• B)The amount of unguaranteed salvage value,if any,determines whether the lease is a capital lease or an operating lease.
• C)The interest rate used to determine the present value of the minimum lease payments also determines whether the lease is a capital lease or an operating lease.
• D)The lessee must use the greater of the lessor's rate of return or the lessee's incremental borrowing rate to determine whether the lease is a capital lease or an operating lease.

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Definitions:

Relative Permanence

The concept that certain things are not absolutely permanent but can be considered permanent relative to specific contexts or conditions.

Negotiable Instrument

A document guaranteeing the payment of a specific amount of money, either on demand or at a set time.

Longevity

The length or duration of life; often used in context to refer to the extended lifespan of individuals or entities.

Relative Permanence

The notion that while situations or states may not be forever, they have a lasting presence or effect that is more enduring than transient phenomena.