Guaranteed residual value is a fixed amount required by the lessor at the termination of the lease only in the absence of a purchase option. a. TRUE b. FALSE
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Q: Which of the following statements about purchase option is correct? a. None of the other choices…
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Q: Under an operating lease, the lessee recognizes a ____________ when the aggregate rental payments is…
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Q: The lessee recognizes a loss on finance lease when the fair value of the leased asset is _______…
A: Solution: When at the end of lease term, fair value of leased asset is lesser than the guaranteed…
Q: Which of the following is not a criterion for a lease to be recorded as a finance lease?(a) There is…
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Q: Initial direct costs incurred by the lessor in connection with specific leasing activities as in…
A: Solution: Initial direct costs incurred by the lessor in connection with specific leasing activities…
Q: What is the theoretical basis for the accounting standard that requires certain long-term leases to…
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Q: n an operating lease, when the annual lease payment is greater than the straight-line amortization…
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Q: Packer Company (the lessor) concludes that its lease meets one of the tests to be classified as a…
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Q: Which of the following is not one of the procedures for accounting by the lessee for a decrease in…
A: In the given case option A is correct... Both are required accounting procedures for the decrease in…
Q: Answer True or False Both finance and operating leases are subject to capitalization.
A: Finance Lease : lease where substantially all risk and rewards incidental to the ownership of the…
Q: When a lessor receives cash on a sales-type lease, which of the following accounts is decreased? A.…
A: PLEASE LIKE THE ANSWER, YOUR RESPONSE MATTERS When a lessor receives cash on a sales-type lease,…
Q: One of the following statements is false: a. If the underlying asset will not revert to the…
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Q: If a sale and leaseback transaction results in a finance lease, any excess of sale proceeds over the…
A: Solution A lease is a contract outlining the terms under which one party agrees to rent an asset -…
Q: When a lease modification results in partial termination of a lease, the change shall be accounted…
A: Answer is option D) The increase (decrease) in lease liability as a result of the lease modification…
Q: At the inception of a finance lease, the guaranteed residual value should be Included at present…
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Q: Statement 1: When the residual value guaranteed by the lessee at the end of lease term is higher…
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Q: When should a lessor recognize in income a nonrefundable lease bonus paid by a lessee on signing an…
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A: Correct option is A. Lower; guaranteed Explanation:
Q: Lease bonus is recognized by the lessor as
A: Lease bonus is an amount paid by the lessee to lessor for the usage of the premises or land that…
Q: he lessor will recognized the same gross profit whether the residual value is guaranteed by the…
A: given statement 1 is about direct finance lease . it is correct. statement 2 about indirect costs…
Q: Which of the following statements is true about initial direct costs? A. Initial direct costs of a…
A: According to the Generally Accepted Accounting Principle, initial direct cost is defined as the…
Q: When a lessor actually sells an asset that it has been leasing, the difference between the sales…
A: Lease is an agreement in which one person gives to another person his asset to use for a specific…
Q: In calculating the amortization of a leased asset, the lessee should subtract a Select one: a.…
A: Amortization- Amortization refers to spreading payments over manifold periods. The word is used for…
Q: . In a lease that is not classified as a manufacturer's lease, initial direct cost is a. added to…
A: Solution: As per accounting standards related to lease, Initial direct costs are often incurred in…
Q: If the gains or losses from the fluctuation in the fair value of the residual accrue to the lessor,…
A: Lease accounting is the accounting to adjust the transaction where a fixed asset is taken on rent…
Q: Guaranteed residual value is a fixed amount required by the lessor at the termination of the lease…
A: Guaranteed Residual value is the value of the asset which has been given on the lease to the lessee…
Q: he lessor recognizes a loss on finance lease when the fair value of the leased asset is _______ than…
A: Solution: The lessor recognizes a loss on finance lease when the fair value of the leased asset is…
Q: Under a sales-type lease without an operating profit, how is the lessor's cost (1.e., the initial…
A: Solution:- Definition :- It is a lease, which transfers substantially all the risk and rewards…
Q: Which of the following statements is correct regarding the accounting for leases? The lessee…
A: SOLUTION A LEASE IS A CONTRACT OUTLINING TERMS UNDER WHICH ONE PARTY AGREES TO RENT AN ASSET - IN…
Q: (4) In a lease that is appropriately recorded as a direct-financing lease by the lessor, unearned…
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Q: The buyer-lessor recognizes the asset from a sale and leaseback transaction resulting to a finance…
A: The buyer-lessor recognizes the asset from a sale and leaseback transaction resulting to a finance…
Q: 24. One of the following statements is false: * a. If the underlying asset will not revert to the…
A: In accordance with IFRS 16, a lease is contract that provides the right to use an asset for a…
Q: When should a lessor recognize as income a nonrefundable lease bonus paid by a lessee on signing an…
A: Solution: The receipt of the lease bonus creates deferred revenue whether refundable or non…
Q: Net investment in a sales-type lease is equal to
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Q: Which of the following is true about lease incentives? a. It forms part of the lease liability and…
A: The question is related to Accounting for Lease. As per IFRS 16 Lease incentives are payments made…
Q: The interest rate implicit in the lease is the discount rate that causes the aggregate of the…
A: As per IFRS 16, the interest rate implicit in the lease is the rate charged by the lessor.
Q: In our Anderson Company example, we assumed that the lease could notbe canceled. What effect would a…
A: Lease: It is renting out an asset to the borrower for a specified time on which lease payments or…
Q: An increase in interest income recognized for the period on a lease agreement will have the effect…
A: The amount of interest received during a certain time period is referred to as interest income. It…
Q: Under a direct financing lease, the excess of aggregate rentals over the cost of the leased property…
A: Solution: Under a direct financing lease, the excess of aggregate rentals over the cost of the…
Q: Which of the following is false with respect to lease accounting under IFRS? IFRS require lessees…
A: Lease: Lease is a contractual agreement whereby the right to use an asset for a particular period of…
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- 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.Guaranteed residual value is a fixed amount required by the lessor at the termination of the lease only in the absence of a purchase option. *TRUE or FALSEAnswer 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
- The lessor recognizes a loss on finance lease when the fair value of the leased asset is _______ than the _________ residual value. A)higher; guaranteed B)lower; guaranteed C)lower; unguaranteed D)higher; unguaranteedThe lessee recognizes a loss on finance lease when the fair value of the leased asset is _______ than the _________ residual value. higher; unguaranteed higher; guaranteed lower; guaranteed lower; unguaranteedThe lessor recognizes a loss on finance lease when the fair value of the leased asset is _______ than the _________ residual value. lower; guaranteed lower; unguaranteed higher; guaranteed higher; unguaranteed
- 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.A lease agreement will qualify as a finance lease if one of these conditionsoccur: A. The lessee returns the leased property to the lessor at the end of the lease term.B. The lease does not have a bargain purchase option.C. The lease term is for major of the economic life of the asset.D. The present value of the minimum lease payment amounts to substantially less than the fair value of the leased asset.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
- Under ASPE, the lessor is required to expense any direct costs associated with a lease up front. True False Kindly solve it.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?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.