An Operating Lease will have which of these expenses (may have more than one answer)? Check All That Apply None of these Rental ExpenseRental Expense Depreciation ExpenseDepreciation Expense Interest Expense This question may have more than one answer,

An Operating Lease will have which of these expenses (may have more than one answer)? Check All That Apply None of these Rental ExpenseRental Expense Depreciation ExpenseDepreciation Expense Interest Expense This question may have more than one answer,

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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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

An Operating Lease will have which of these expenses (may have more than one answer)?

Check All That Apply

None of these
Rental ExpenseRental Expense
Depreciation ExpenseDepreciation Expense
Interest Expense

This question may have more than one answer,

Definition Video Definition Accounting method wherein the cost of a tangible asset is spread over the asset's useful life. Depreciation usually denotes how much of the asset's value has been used up and is usually considered an operating expense. Depreciation occurs through normal wear and tear, obsolescence, accidents, etc. Video

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Which of the following statements is true about initial direct costs? A. Initial direct costs of a sales-type lease should be expensed at the commencement of the lease only if no selling profit or loss has been incurred. B. Initial direct costs are ownership-type costs such as insurance, maintenance, and taxes. C. Initial direct costs of an operating lease should be recorded by the lessor as a prepaid asset. D. Initial direct costs should always be debited against income by the lessor in the period of the inception of the lease.
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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
Justify the effect of additional payments on lease accounting, such as non-lease payments, initial direct expenses, and leasehold improvements.
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In a Type A lease, “front loading” of lease expense and lease revenue occurs. What does this mean, and how is it avoided in a Type B lease?
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