CAF-6 · Chapter 3 · Question 2 of 15
Proton Corp leases a warehouse for 5 years. The contract includes an option to extend for another 3 years. Proton is reasonably certain to exercise this option. What is the lease term?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) 8 years
Explanation
The lease term includes the non-cancellable period plus periods covered by an extension option if the lessee is reasonably certain to exercise it. Therefore, 5 years plus the 3-year extension equals 8 years.
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