28 Which one of the following is a correct statement of one of the indicators of a finance lease? A. The lease transfers ownership of the property to the lessor. B. The lease contains a purchase option. C. The lease term is for the major part of the economic life of the leased property. D. The minimum lease payments (excluding executory costs) equals or exceeds 90% of the fair value of the leased property.

28 Which one of the following is a correct statement of one of the indicators of a finance lease? A. The lease transfers ownership of the property to the lessor. B. The lease contains a purchase option. C. The lease term is for the major part of the economic life of the leased property. D. The minimum lease payments (excluding executory costs) equals or exceeds 90% of the fair value of the leased property.

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter20: Accounting For Leases

Section: Chapter Questions

Problem 8MC: At its inception, the lease term of Lease G is 65% of the estimated remaining economic life of the...

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At its inception, the lease term of Lease G is 65% of the estimated remaining economic life of the leased property. This lease contains a purchase option that is reasonably expected to be exercised. The lessee should record Lease G as: a. neither an asset nor a liability b. an asset but not a liability c. an expense d. an asset and a liability
30. The amount to be recorded as the cost of an asset under a finance lease is equal to the present value of the lease payments plus the present value of any unguaranteed residual value. carrying value of the asset on the lessor's books. present value of the lease payments. present value of the lease payments or the fair value of the asset, whichever is lower.
18. Which of the following lease conditions would result in a finance lease to the lessee? a.The fair market value of the property at the inception of the lease is $18,000; the present value of the minimum lease payments is $16,000. b.The lease term is 70% of the property's economic life. c.The lessee will return the property to the lessor at the end of the lease term. d.The lessee can purchase the property for $1 at the end of the lease term.
12.Which of the following statements correctly describes the initial measurement of a lease liability by a lessee under IFRS? Select one: a. The cost of any bargain purchase option is included in the calculation of the lease liability b. The lease liability is discounted to its present value using the lessee’s incremental borrowing rate c. Guaranteed and unguaranteed residual values are included in the calculation of the lease liability at initial measurement d. All variable lease payments are included in the calculation of the lease liability at initial measurement
One of the determinative criteria for a finance lease specifies that the lease term be equal to or greater than a. 75% of the economic life of the leased asset b. 50% of the economic life of the leased asset c. the economic life of the leased asset d. 90% of the economic life of the leased asset
31 The interest rate implicit in the lease is the discount rate that causes the aggregate of the present value of the minimum lease payments and the unguaranteed residual value to be equal to theA. fair value of the leased asset.B. fair value of the leased asset and initial direct costs of the lessor.C. fair value of the leased asset and initial direct costs of the lessee.D. gross investment in the lease.
34. A lessee with a finance lease containing a bargain purchase option should depreciate the leased asset over the life of the asset or the term of the lease, whichever is shorter. life of the asset or the term of the lease, whichever is longer. asset's remaining economic life. term of the lease.
Which of the following lease provisions would cause a lease to be classified as an operating lease? Select one: A. The collectability of lease payments by the lessor is unpredictable B. The lease contains a bargain purchase option C. The term of the lease is more than 75 percent of the estimated economic life of the leased property D. The present value of the minimum lease payments equals or exceeds 90 percent of the fair value of the leased property
1. Gross investment in the lease is equal to Present value of lease payments under a finance lease of the lessor and any unguaranteed residual value. Sum of the lease payments receivable by a lessor under a finance lease and any unguaranteed residual value accruing to the lessor The lease payments under a finance lease of the lessor Present value of the lease payments under a finance lease of the lessor.
Which of the following is not one of the criteria for determining whether a lease is a finance lease? A. The asset cost is greater than $100,000B. The lease grants the lessee an option to purchase the asset that the lessee is reasonably certain to exerciseC. The lease term is for the major part of the remaining economic life of the assetD. Alease that transdies ownership of the asset to the lessee by the end of the lease term
One of the determinative criteria for a finance lease specifies that the lease term be equal to or greater than the economic life of the leased asset 50% of the economic life of the leased asset 75% of the economic life of the leased asset 90% of the economic life of the leased asset
41. The basic difference between a direct-financing lease and a sales-type lease is the allocation of initial direct costs by the lessor to periods benefited by the lease arrangements. recognition of the profit on the sale. amount of the depreciation recorded each year by the lessor. manner in which rental receipts are recorded as rental income.