Test: CPA Financial Accounting and Reporting (FAR)

1.

The Global Group leases an asset from Earth Co for 8 years. The life of the asset is expected to be 10 years. If the lease does NOT contain a bargain purchase option or a transfer of title, which of the following is correct?

The leased asset would be depreciated by the Global Group over 8 years

The leased asset would be accounted for by the Global Group as an operating lease

The leased asset would be depreciated by the Global Group over 10 years

The leased asset would be depreciated using the same method for book purposes as for tax purposes

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