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1. If the lease transfers ownership of the property to the lessee by the end of the lease term. this would not cause a lease
1. If the lease transfers ownership of the property to the lessee by the end of the lease term. this would not cause a lease to be declared a capital lease for accounting purposes. True False 2. An old machine with a book value of $30,000 was traded in on a new similar machine. Its fair value is $100,000. The new machine has a book value of $80,000 and a fair market value of $120,000. The cost of the new machine will be $80,000. True False 3. If the contract term for the licensing arrangement provides access to the right of access intellectual property, the revenue is recognized at a point in time. True False 4. Econom ic Value Added (EVA) is the difference between a product's input cost and final sales price. This figure is dependent up on the firm's earnings process. True False 5. Bondo Manufacturing has just signed a lease agreement with MIPS Computers. Bondo agreed to pay $15,000 per month for 12 months. The purchase price of the equipment is $400,000. According to the lease agreement, MIPS will pay property taxes and insurance on the equipment. This lease is most likely a financial lease. True False 6. Tax-reduction is a legitimate reason for leasing
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