1. For the lessee to account for a lease as a capital lease, the lease must meet:a.All four of the criteria specified by GAAP regarding accounting for leases.b. Any one of the six criteria specified by GAAP regarding accounting for leases.c.Any two of the criteria specified by GAAP regarding accounting for leases.d. Any one of the four criteria specified by GAAP regarding accounting for leases.2. GAAP requires that some lease agreements be accounted for as purchases. The theoretical justification for this treatment is that a lease of this type:a. Complies with the concept of form over substance.b. Reflects the relationship of cause and effect.c. Satisfies the concept of historical cost.d. Conveys most of the risks and benefits of property ownership.3. Of the four criteria for a capital lease, the one that most often is the decisive criteria:a. The 75% of economic life test.b. The transfer of title.c. The 90% of fair value test.d. The bargain purchase option.4. One February 1, 2011, Pearson Corporation became the lessee of equipment under a five-year, noncancelable lease. The estimated economic life of the economic is 8 years. The fair value of the equipment was $ 800,000. The lease does not meet the definition of a capital lease in terms of a bargain purchase option, transfer of title, or the lease term. However, Pearson must classify this as a capital lease if the present value of the minimum lease payments is at least:a. $ 800,000b. $ 720,000d. $ 550,0005. A sales type lease differs from a direct financing lease in one respect:a. The lessor receives a manufacturers or dealers profit.b. The lessor receives more interest than on a direct financing lease.c. The lessor receives less interest than on a direct financing lease.d. The lessor uses a longer amortization period than on a direct financing lease.
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