Xerox Leases Met the Criteria Under SFAS No

Multiple Choice

Xerox leases met the criteria under SFAS No.13 to be accounted for as "sales-type" lease.What did Xerox's top management do that violated GAAP?

A) Xerox recognized the fair value of the equipment leased as income in the period the lease is delivered, less any residual value the equipment is expected to retain once the lease expires.
B) Xerox prorated the portion of the lease payments that represents the fee for repair services and copier supplies over the term of lease against the financing income.
C) Xerox recognized financing revenue when it is earned over the life of the lease.
D) Xerox used the "ROE" method which pulled forward a porting of finance income and recognized it immediately as equipment revenue and the "margin normalization" method which pulled forward a portion of service income and recognized it immediately as equipment revenue.