Under the Provisions of ASU 2016-02,in the Event a Lease

question 18

Multiple Choice

Under the provisions of ASU 2016-02,in the event a lease does not qualify as a sales-type lease by a leaser,which of the following is not a criterion to be met to qualify the lease as a direct financing lease?

• A)The present value of the sum of lease payments and any residual value guaranteed by the lessee that is not already reflected in lease payments and/or any other third party unrelated to the lessor equals or exceeds substantially all of the fair value of the underlying asset
• B)It is probable that the lessor will collect the lease payments plus any amount necessary to satisfy a residual value guarantee
• C)The lease transfers ownership of the underlying asset to the lessee by the end of the lease term
• D)All leases that do not qualify as sales type leases for lessor are recorded as direct financing leases.

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Definitions:

Space Versus Equipment

The trade-off or balance between the physical area available for operations and the machinery or equipment required to produce goods or services.

People Versus Space

A concept comparing the cost, efficiency, and effectiveness of human labor versus physical space in operations and business strategies.

Private

Pertaining to or concerning individuals or organizations not affiliated with or controlled by the government or public sectors.