In Order for a Lease to Be Considered a Finance

question 28

Multiple Choice

In order for a lease to be considered a finance (or capital) lease,international accounting standards require that a lease agreement

• A) transfers substantially all risks and rewards incident to ownership of an asset to the lessee.
• B) contains a provision requiring transfer of title to the lessee by the end of the lease term.
• C) provides that the term of the lease contract be longer than one year.
• D) provides for a bargain purchase option.

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Definitions:

Protection

Measures or actions taken to safeguard against harm or damage, often in the context of legal rights, intellectual property, or personal safety.

Identification

The process of recognizing or establishing the identity of a person or thing, often through the analysis of identifying factors or markers.

Goods

Items or merchandise that are tangible, movable, and sold or used in commerce.

Contract

A legally binding agreement between two or more parties that outlines rights and duties and is enforceable by law.