Int. 3 Exam 1
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GAAP requires that some lease agreements be accounted for as purchases of assets. The theoretical justification for this treatment is that a lease of this type:
Conveys most of the benefits of property ownership
Distinguishing between operating and finance leases is due in large part to the accounting concept of:
Substance over form
When the total expenses over the life of an operating lease are compared to the total expenses over the life of a finance lease, one will find that:
The expenses of the finance lease and operating lease are equal
One of the five criteria for a finance lease specifies that the lease term be equal to or greater than:
The major part of the remaining economic life of the leased property