NOTE: The following multiple choice questions require present value information. On January 1, 2006, Price Corporation signed a five-year noncancelable lease for certain machinery. The terms of the lease called for:
Under which of the following conditions does the equipment lease qualify for capital lease accounting?
A) The lease does not contain a bargain purchase option.
B) The lease term is equal to or greater than 75% of the asset's economic life.
C) The lease term is equal to or greater than 90% of the asset's economic life.
D) The lease does not transfer ownership to the lessee at the end of the lease term.

Question

NOTE: The following multiple choice questions require present value information. On January 1, 2006, Price Corporation signed a five-year noncancelable lease for certain machinery. The terms of the lease called for:
 Under which of the following conditions does the equipment lease qualify for capital lease accounting?
A) The lease does not contain a bargain purchase option. 
B) The lease term is equal to or greater than 75% of the asset's economic life. 
C) The lease term is equal to or greater than 90% of the asset's economic life. 
D) The lease does not transfer ownership to the lessee at the end of the lease term.

Quizplus · Accepted Answer

The Answer of NOTE: The following multiple choice questions require present value information. On January 1, 2006, Price Corporation signed a five-year noncancelable lease for certain machinery. The terms of the lease called for:
 Under which of the following conditions does the equipment lease qualify for capital lease accounting?
A) The lease does not contain a bargain purchase option. 
B) The lease term is equal to or greater than 75% of the asset's economic life. 
C) The lease term is equal to or greater than 90% of the asset's economic life. 
D) The lease does not transfer ownership to the lessee at the end of the lease term.

NOTE: the Following Multiple Choice Questions Require Present Value Information