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Questions and Answers
Which of the following situations would normally lead to a lease being classified as a finance lease at the inception date?
Which of the following situations would normally lead to a lease being classified as a finance lease at the inception date?
- The lessee has the option to purchase the leased asset, and it is reasonably certain that the option will be exercised.
- The lease term is for a major part of the economic life of the asset, even if title is not transferred. (correct)
- The lease transfers ownership to the lessee by the end of the lease term.
- The present value of lease payments to be received by the lessor is equal to the fair value of the leased asset.
Which of the following indicators could lead to a lease being classified as a finance lease at the inception date?
Which of the following indicators could lead to a lease being classified as a finance lease at the inception date?
- The lessee can cancel the lease.
- Gains/losses from fluctuations in the fair value of the residual accrue to the lessee.
- The lessee has the ability to continue the lease for a secondary period at a rent substantially lower than market rent.
- All of the above. (correct)
Which of the following is NOT an example of a situation that would normally lead to a lease being classified as a finance lease at the inception date?
Which of the following is NOT an example of a situation that would normally lead to a lease being classified as a finance lease at the inception date?
- The lease term is for a major part of the economic life of the asset, even if title is not transferred.
- The lessee has the option to purchase the leased asset, and it is reasonably certain that the option will be exercised.
- The present value of lease payments to be received by the lessor is equal to the fair value of the leased asset. (correct)
- The lease transfers ownership to the lessee by the end of the lease term.
Which of the following indicators could NOT lead to a lease being classified as a finance lease at the inception date?
Which of the following indicators could NOT lead to a lease being classified as a finance lease at the inception date?
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Which of the following is an example of a situation that could lead to a lease being classified as a finance lease at the inception date?
Which of the following is an example of a situation that could lead to a lease being classified as a finance lease at the inception date?
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