Which of the following statements is true regarding the treatment of leases on the financial statements?
a. U.S. GAAP prohibits the presentation of leases on the financial statements since they are off-balance sheet transactions.
b. U.S. GAAP criteria for lease capitalization are less strict than IFRS.
c. The criteria concerning whether a lease is a capital lease are very different for IFRS and U.S. GAAP.
d. The criteria required for lease capitalization under IFRS are considered more like guidelines rather than strict rules.
d
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Which of the following statements about the licensing of insurance companies is (are) true?
I. A new capital stock insurer must meet minimum capital and surplus requirements, which vary by state and line of insurance. II. The licensing requirements for insurance companies are less stringent than those imposed on most other types of firms. A) I only B) II only C) both I and II D) neither I nor II
The risk of the debt capital is less than that of other long-term contributors of capital because ________
A) they have a lower priority of claim against any earnings or assets available for payment B) they have the stockholders' personal assurance for all future interest payments C) there is no interest rate risk as the interest rate is predetermined D) the tax-deductibility of interest payments lowers the debt cost to a firm substantially