If title is not expected to pass to the lessee by the end of the lease term, lease of land is classified as A. operating lease. B. either operating lease or finance lease. C. finance lease. D. neither operating lease nor finance lease.
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t26
If title is not expected to pass to the lessee by the end of the lease term, lease of land is classified as
A. operating lease.
B. either operating lease or finance lease.
C. finance lease.
D. neither operating lease nor finance lease.
Step by step
Solved in 2 steps
- 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.Lessor Accounting with Guaranteed Residual Value Use the information for Edom Company in E20-8, except that the residual value was guaranteed by Davis Company (the lessee). Required: 1. Assuming that the lease is a sales-type lease, calculate the selling price. 2. Prepare a table summarizing the lease receipts and interest income earned by Edom. 3. Prepare journal entries for Edom tor the years 2019 and 2020.Lessee and Lessor Accounting Issues The following information is available for a noncancelable lease of equipment entered into on March 1, 2019. The lease is classified as a sales-type lease by the lessor (Anson Company) and as a finance lease by the lessee (Bullard Company). Assume that the lease payments are nude at the beginning of each month, interest and straight-line depreciation are recognized at the end of each month, and the residual value of the leased asset is zero at the end of a 3-year life. Required: 1. Record the lease (including the initial receipt of 2,000) and the receipt of the second and third installments of 2,000 in Ansons accounts. Carry computations to the nearest dollar. 2. Record the lease (including the initial payment of 2,000), the payment of the second and third installments of 2,000, and monthly depreciation in Bullards accounts. The lessee records the lease obligation at net present value. Carry computations to the nearest dollar.
- t24 In a lease that is recorded as a manufacturer’s or dealer’s lease by the lessor, interest revenue should beA. recognized in full as revenue at the lease’s inception.B. recognized over the period of the lease using the straight-line method C. recognized over the period of the lease using the interest method.D. not be recognized in the accounts.When a lease transfers ownership to the lessee by the end of the lease term, the underlying asset is depreciated A. Over the useful life of the asset B. Over the lease term C. Over the useful life of the asset or lease term whichever is shorter D. Not depreciated1. 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.
- At its inception, the lease term of Lease G is 50% of the estimated remaining economic life of the leased property. In addition, this lease contains a purchase option that is reasonably certain to be exercised by the lessee. The lessee should record the signing of Lease G by recognizing Neither an asset nor a liability Both an asset and a liability An expense An asset but not a liabilityWhich of the following statements is correct related to lease? a. The leased asset is depreciated over the asset's useful life or lease term whichever is higher. b. The leased asset is depreciated over the asset's useful life. c. The leased asset is recorded using the higher amount between fair value of the asset and present value of the minimum lease payments. d. Under IFRS 16 a lease is defined as ‘a contract that conveys the right to use an asset for a period of time in exchange for consideration'.(4) In a lease that is appropriately recorded as a direct-financing lease by the lessor, unearned income A. should be amortized over the period of the lease using the effective interest method. B. should be amortized over the period of the lease using the straight-line method. C. does not arise. D. should be recognized at the lease's expiration. E. None of these answer choices are correct.
- At the inception of the lease contract, the lease term is determined to be equivalent to 55% of the economic life of the leased property but the lease contract contains a bargain purchase option. The lessee should record the lease as Neither asset nor liablity Asset but not liaility Asset and Liability ExpenseA lessee is allowed to elect not to record a right-of-use asset and lease payable at the beginning of the lease term for a lease that has a lease term of 12 months or having a value of $5,000 or less when using: a. IFRS. b. U.S. GAAP. c. Either U.S. GAAP or IFRS. d. Neither U.S. GAAP nor IFRS.44. The right-of-use asset is increased by lease prepayments made by the lessee and initial direct costs incurred by the lessee. lease incentives received. initial direct costs incurred by the lessee only. prepaid lease payments only.