A lessee should initially recognize a right-of-use asset at cost. This cost figure includes: The undiscounted amount of the lease payments to be made after commencement of the lease The amount of the initial measurement of the lease liability Any initial direct costs incurred by the lessor The fair value of the underlying asset

A lessee should initially recognize a right-of-use asset at cost. This cost figure includes: The undiscounted amount of the lease payments to be made after commencement of the lease The amount of the initial measurement of the lease liability Any initial direct costs incurred by the lessor The fair value of the underlying asset

Financial Accounting Intro Concepts Meth/Uses

14th Edition

ISBN:9781285595047

Author:Weil

Publisher:Weil

Chapter11: Notes, Bonds, And Leases

Section: Chapter Questions

Problem 12Q

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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
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.
Which of the following should be included by the lessee in determining the amount of the right-to-use asset and lease liability:
In calculating the amortization of a leased asset, the lessee should subtract a Select one: a. guaranteed residual value and amortize over the term of the lease. b. unguaranteed residual value and amortize over the term of the lease. c. guaranteed residual value and amortize over the life of the asset. d. unguaranteed residual value and amortize over the life of the asset. e. None of the above.
Which of the following should be included by the lessee in determining the amount of the right-to-use asset and lease liability: a. Fixed Payments: Yes/Unguaranteed Residual Value: Nob. Fixed Payments: Yes/Unguaranteed Residual Value: Yesc. Fixed Payments: No/Unguaranteed Residual Value: Yesd. Fixed Payments: No/Unguaranteed Residual Value: No
Which of the following statements is/are not true? Interest expense on the lease liability will increase the carrying amount of the liability. A lessee shall measure the lease liability at the present value of the lease payments that are not paid at that date, using the lessee's incremental borrowing rate. Right-of-use asset cost will include an estimates cost to be incurred by the lessee in dismantling and removing the underlying asset, restoring the site on which it is located or restoring the underlying asset to the condition required by the terms and conditions of the lease. Group of answer choices Only statement 2. All statements are true. Only statements 2 and 3. None of the statements are true.
The residual value is the estimated fair value of theleased property at the end of the lease term.(a) Of what significance is (1) an unguaranteed and (2) aguaranteed residual value in the lessee’s accountingfor a capitalized-lease transaction?(b) Of what significance is (1) an unguaranteed and (2) aguaranteed residual value in the lessor’s accountingfor a direct-financing lease transaction?
For a lease that transfers ownership of the property to the lessee by the end of the lease term, the lessee should: a.amortize the right-of-use asset over the economic life of the asset in a manner consistent with the lessee's normal depreciation policy for owned assets b.amortize the right-of-use asset over the lease term in a manner consistent with the lessee's normal depreciation policy for owned assets c.record each lease payment as lease expense d.combine interest expense and amortization expense and report as a single lease expense
Initially, a lease liability is measured a. by the lessee at the present value of the lease payments that are not paid at the commencement date of the lease. b. by the lessor at the present value of the total lease payments payable at the commencement date of the lease. c. by the lessor at the total cost of the right-of-use asset. d. by the lessee at the total cost of the right-of-use asset.
The appropriate valuation of an operating lease in the balance sheet of the lessee is? right of use asset present value of lease payments nil gross amount of lease payments
The initial direct cost is added to the cost of the asset to get the netinvestment in the lease which shall be spread over the lease term. Question: True or False
If there is a reasonable certainly that lessee will obtain ownership by the end of the lease term, the depreciation of the leased asset is based on the Useful life of the asset or lease term, whichever is longer Useful life of the asset or lease term, whichever is shorter Useful life of the asset Lease term