A lease agreement whereby the lessee recognized rent expense which is always equal to the rent income recognized by the lessor at a given period of time. Group of answer choices Terminating lease Operating lease Finance lease Sale type lease

A lease agreement whereby the lessee recognized rent expense which is always equal to the rent income recognized by the lessor at a given period of time. Group of answer choices Terminating lease Operating lease Finance lease Sale type lease

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 9E: Lessor Accounting with Guaranteed Residual Value Use the information for Edom Company in E20-8,...

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Concept explainers

Leasing

Leasing is a contractual arrangement in which someone (a lessee) pays the owner (or lessor) of a building, land, vehicle, or other asset for the use of that asset. The lease is the agreement between lessee and lessor.

Question

A lease agreement whereby the lessee recognized rent expense which is always equal to the rent income recognized by the lessor at a given period of time.

Group of answer choices Terminating lease Operating lease Finance lease Sale type lease

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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
Define each of the following terms: a. Lessee; lessor b. Operating lease; financial lease; sale-and-leaseback; combination lease; synthetic lease; SPE c. Offbalance sheet financing; capitalizing d. FASB Statement 13; ASU 2016-02 e. Guideline lease f. Residual value g. Lessees analysis; lessors analysis h. Net advantage to leasing (NAL) i. Alternative minimum tax (AMT)
Use the following information to decide whether this equipment lease qualifies as an operating, sales-type, or direct financing lease to a lessor. a. There is no transfer of ownership at the end of the lease term. There is no bargain purchase option. The lease term is 60% of the economic life of the leased property. The present value of lease payments, including a residual value guaranteed by the lessee, is 100% of the fair value of the leased property to the lessor. The collectability of the lease payments is reasonably assured. The leased asset was not of a specialized nature. b. Same as (a), except that the residual value is guaranteed by a third party, not the lessee. The present value of the residual value guarantee is 15% of the fair value of the leased property. c. Same as (a), except that: the present value of the lease payments, including a residual value guaranteed by the lessee, is only 50% of the fair value of the leased asset. The collectability of the minimum lease payments is not predictable.
Lessor Accounting with Guaranteed Residual Value Use the information for Edom Company in E20-8, except that the residual value was guaranteed by Davis Company (the lessee). Required: 1. Assuming that the lease is a sales-type lease, calculate the selling price. 2. Prepare a table summarizing the lease receipts and interest income earned by Edom. 3. Prepare journal entries for Edom tor the years 2019 and 2020.
A lease agreement whereby the lessee recognized rent expense which is always equals to the rent income recognized by the lessor at a given period of time. A. Operating lease B. Finance lease C Terminating lease D. Sale type lease
The rent expense of the lessee maybe composed of the following:I. Straight-line amortization of total rental payments over the lease term plus any free rent.II. Straight-line amortization of lease bonus paid by the lessee at inception of the lease.III. Any contingent rent accrued to the lessor as part of lease agreement. Group of answer choices I and III only II and III only I and II only I, II, and III
A lease agreement whereby the lessor shall recognized gross profit at inception of the lease? a. Multi-agreement lease b. Direct finance lease c. Operating lease d. Dealers lease
The rent expense of the lessee maybe composed of the following:I. Straight-line amortization of total rental payments over the lease term plus any free rent.II. Straight-line amortization of lease bonus paid by the lessee at inception of the lease.III. Any contingent rent accrued to the lessor as part of lease agreement. A. I and III only B. I, II, and III C. II and III only D. I and II only
The rent expense of the lessee maybe composed of the following:I. Straight-line amortization of total rental payments over the lease term plus any free rent.II. Straight-line amortization of lease bonus paid by the lessee at inception of the lease.III. Any contingent rent accrued to the lessor as part of lease agreement. I and III only I and II only II and III only I, II, and III
An amount paid by the lessee to the lessor in addition to the periodic rental which is treated by the lessor as an unearned rent income to be amortized over the lease term. a. Contingent rent b. Lease bonus c. Initial direct cost d. Security deposit
Each period of a finance lease, the lessee records a lease expense that includes which of the following? Group of answer choices Interest expense on the lease liability, using the effective interest rate method and the discount rate it used to compute the present value of the liability at the lease commencement date; variable lease payments not included in the lease liability in the period in which the obligation for the variable payments is incurred; and changes in variable lease payments that depend on an index or rate. Neither A nor B is correct. Interest expense on the lease liability, using the effective interest rate method and the discount rate it used to compute the present value of the liability at the lease commencement date; variable lease payments not included in the lease liability in the period in which the obligation for the variable payments is incurred. Both A & B are correct.
The lessee normally measures the lease liability to be recorded as the: Select one: a. Present value of the minimum lease payments. b. The future value of the minimum lease payments c. The fair market value of the leased asset. d. The sum of the cash payments over the term of the lease.