Answer True or False Both finance and operating leases are subject to capitalization.Under an operating lease, the lease bonus paid by the lessee to the lessor and amortized over the lease term as a reduction to lease income.When rental payments vary over the term of the operating lease, the lessor should recognize lease income on a straight-line basis, unless there is another method that is more appropriateThe lessor uses the implicit interest rate in determining the present value of the lease paymentsTermination penalties are included in the lease payments if the lease term reflects the lessee exercising an option to terminate the lease.In a sale and leaseback transaction that qualifies as a sale under PFRS 16, the seller-lessee recognized only the amount of any gain or loss that relates to the rights transferred to the buyer-lessor

Finance Lease : lease where substantially all risk and rewards incidental to the ownership of the…

Answered: Answer True or False Both finance…

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 8RE: Use the following information to decide whether this equipment lease qualifies as an operating,...

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Answer True or False

Both finance and operating leases are subject to capitalization.
Under an operating lease, the lease bonus paid by the lessee to the lessor and amortized over the lease term as a reduction to lease income.
When rental payments vary over the term of the operating lease, the lessor should recognize lease income on a straight-line basis, unless there is another method that is more appropriate
The lessor uses the implicit interest rate in determining the present value of the lease payments
Termination penalties are included in the lease payments if the lease term reflects the lessee exercising an option to terminate the lease.
In a sale and leaseback transaction that qualifies as a sale under PFRS 16, the seller-lessee recognized only the amount of any gain or loss that relates to the rights transferred to the buyer-lessor

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