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Basic Question 8 of 16
What is the estimated difference between operating lease expense and pro-forma capital lease expense for a mature firm at the midpoint of a lease's life?
B. Operating lease expense is less than pro-forma capital lease expense.
C. The relationship between operating lease expense and pro-forma capital lease expense varies from firm to firm.
D. Operating lease expense is not significantly different from pro-forma capital lease expense.
A. Operating lease expense is greater than pro-forma capital lease expense.
B. Operating lease expense is less than pro-forma capital lease expense.
C. The relationship between operating lease expense and pro-forma capital lease expense varies from firm to firm.
D. Operating lease expense is not significantly different from pro-forma capital lease expense.
User Contributed Comments 4
| User | Comment |
|---|---|
| kuan | Given the firm is mature.. Shouldnt the capital lease expense be less? |
| Piersy | I thought A, b/c firm is mature therefore towards the end of the CL and lease expense will be less than equivalent OL lease expense. But it's the middle of the lease's life... |
| americade | after depreciation / amortization falls off to nothing they are about the same |
| bundy | Key is mid point its the point weher the expenses are pretty much equal |
I just wanted to share the good news that I passed CFA Level I!!! Thank you for your help - I think the online question bank helped cut the clutter and made a positive difference.
Edward Liu
Learning Outcome Statements
explain the financial reporting of leases from the perspectives of lessors and lessees
CFA® 2024 Level I Curriculum, Volume 2, Module 8.