determining whether a contract is or contains a lease?1. Which of the following is not one of the criteria whenc. Right to obtain substantially all of the economic benefitsfrom use of an identified asset throughout the period of'identified' if it is implicitly specified in the contract.C. the customer shall not account for the contract as a lease ifa. the customer shall not account for the contract as a lease.b. the customer shall account for the contract as a lease.d. the customer shall account for the contract as a lease if thatit has the right to direct the use of the asset.PROBLEM 2: MULTIPLE CHOICE - THEORYa. Identified assetb. Identified liabilityfrom use of an identified asset throughout the period ofd. Right to direct the use of the identified asset throughoutthe period of useuse2. Which of the following statements is incorrect?a. An asset can be 'identified' if it is implicitly specified atthe time it is made available for use by the lessee.b. In a lease contract, the party who legally owns the asset ISthe lessor.c. The lessee recognizes an asset for its right-of-use in a leasecontract only under the general recognition of PFRS 16.d. A portion of an asset that is not physically distinct can be'identified' if it is implicitly specified in the contract.3. If the supplier has substitution right,right is not substantive.4. Nyt Co. ente

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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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What is a substitution right, and when does that right result in a contract not being a lease?
Which of the following statements are false under a sale a leaseback transaction? I. If a sale and leaseback transactions results in a finance lease, any excess of proceeds over the carrying amount shall not be immediately recognized as income by a seller-lessee. Instead, it shall be deferred and amortized over the lease term. II. If the sale price is established at fair value under an operating lease, any gain or loss shall be deferred and amortized over the period which the asset is expected to be used. I only II ONLY BOTH I AND II NEITHER I OR II
In relation to a short-term operating lease, which of the following statements is NOT correct? a. The lessee will be responsible for repairs and maintenance of the leased asset b. The lease period will not cover the leased asset’s useful economic life c. The asset and lease obligation will not be recorded in the statement of financial position d. An operating lease is a rental agreement Clear my choice
1. In a lease that is recorded as a manufacturer's lease or dealer's lease by the lessor, interest revenue a. should be recognized in full as revenue at the lease's inception. b. should be recognized over the period of the lease using the straight-line method. c. should be recognized over the period of the lease using the interest method. d. does not arise.
Packer Company (the lessor) concludes that its lease meets one of the tests to be classified as a sales-type lease. However, collection of lease payments is not probable. In this case, how should Packer account for any lease payments received?
If, as part of the accounting for a lease, the lessee debits an asset and credits a liability, then the lease must be a(n): A. finance lease. B. operating lease. C. operating lease or finance lease. D. none of the above. thanks for help
Asnwer true or false 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 The lessor uses the implicit interest rate in determining the present value of the lease payments 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 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.
Under an operating lease: a) the lessee does not obtain substantially all the benefits and risks of ownership. B) the lease transaction is reported more like a purchase. C) No liability is reported on the balance sheet D) All criteria need to be met to qualify for this classification E) Only one criteria needs to be met to qualify for this classification
Answer True or False Initial direct costs are immediately recognized as an expense by the lessor when the cost incurred in conjunction with an operating lease. 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
Which of the following is not a criterion for a lease to be recorded as a finance lease?(a) There is transfer of ownership.(b) The lease is cancelable.(c) The lease term is for the major part of the economic life of the asset.(d) There is a bargain-purchase option.
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.
Occasionally, a lease agreement includes a guarantee by the lessee that the lessor will recover a specified residual value when custody of the asset reverts back to the lessor at the end of the lease term. Under what circumstance can the guaranteed residual value influence the amounts recorded by the lessee and lessor? In that circumstance, how are the amounts affected?

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