Asked by Martie Coleman on Jun 21, 2024
Verified
Current GAAP defines lessors' treatment of leases according to Type I and Type II characteristics.Type I characteristics are linked to the critical event criteria for revenue recognition.
GAAP
Generally Accepted Accounting Principles, a common set of accounting principles, standards, and procedures that companies must follow when they compile their financial statements.
Type I And Type II
Commonly refers to errors in hypothesis testing: Type I error is rejecting a true null hypothesis, while Type II error is failing to reject a false null hypothesis.
Critical Event Criteria
Specifications or guidelines used to identify significant events that could impact an organization's operations or processes.
- Acquire knowledge of the distinct standards GAAP prescribes for lease accounting.
- Comprehend the accounting methods and profit recognition utilized by lessors for various lease arrangements.
Verified Answer
JD
Julisa Del RioJun 23, 2024
Final Answer :
True
Explanation :
This statement is correct. GAAP defines lessors' treatment of leases according to Type I and Type II characteristics, with Type I characteristics linked to the critical event criteria for revenue recognition.
Learning Objectives
- Acquire knowledge of the distinct standards GAAP prescribes for lease accounting.
- Comprehend the accounting methods and profit recognition utilized by lessors for various lease arrangements.