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Define the Following Terms

Question 234

Matching

Define the following terms:

Premises:

Responses:

bargain renewal option

The lessee has the option of extending the lease at a substantially reduced rate.

lease term

The interest rate that the lessee would receive from a financial institution if the asset were t be purchased.

incremental borrowing rate

The lease term includes all terms prior to the exercise date of a bargain purchase option; all bargain renewal terms; and all renewal terms at the lessor's option.

Premises:

bargain renewal option

lease term

incremental borrowing rate

Responses:

The lessee has the option of extending the lease at a substantially reduced rate.

The interest rate that the lessee would receive from a financial institution if the asset were t be purchased.

The lease term includes all terms prior to the exercise date of a bargain purchase option; all bargain renewal terms; and all renewal terms at the lessor's option.

Correct Answer:

Premises:

Responses:

bargain renewal option

lease term

incremental borrowing rate

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