Match the words with the term. one who lends an asset purchase one who pays to use an asset cancellable upon notice agreed commitment [Choose ] [Choose] financial lease sale and leaseback lessor operating lease lessee [Choose] [Choose] [Choose]
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- Why are compound interest concepts appropriate and applicable in accounting for a sales-type lease?Describe how a "bargain buy option" affects the lessee's accounting for a finance lease deal.The buyer-lessor recognizes the asset from a sale and leaseback transaction resulting to a finance lease at? carrying amount sale price the lower of the sale price and fair value fair value
- Match the words with the term. Question 4 options: one who pays to use an asset agreed commitment purchase cancelable upon notice one who lends an asset 1. lessee 2. sale and leaseback 3. financial lease 4. operating lease 5. lessorCompare the way a purchase option that is reasonably certain to be exercised and a lessee-guaranteed residual value are treated by the lessee and lessor when determining lease payments.Which of the following is true about lease incentives?a. It forms part of the lease liability and right of use asset when the amount is actually receivedb. It forms part of the lease liability when the amount is still receivablec. It forms part of the lease liability and right of use asset when the amount is still receivabled. None of the choices
- Which of the following statements is most CORRECT? Oa. A key difference between a capital lease and an operating lease is that with a capital lease, the lease payments provide the lessor with a return of the funds invested in the asset plus a return on the invested funds, whereas with an operating lease the lessor depends on the residual value to realize a full return of and on the investment. Ob. Finance leases usually have a cancelation feature. Oc. Capital, or financial, leases generally provide for maintenance by the lessor. Od. Capitalizing a lease means that the firm issues equity capital in proportion to its current capital structure, in an amount sufficient to support the lease payment obligation. Oe. The fixed charges associated with a lease can be as high as, but never greater than, the fixed payments associated with a loan.TRUE OR FALSE: in a sales type lease the net investment in the lease is credited to the appropriate asset account. If false, why?See attached picture A) What is the theoretical basis for the accounting standard that requires certain long-term leases to be capitalized by the lessee? Do not discuss the specific criteria for classifying a specific lease as a capital lease.
- If the gains or losses from the fluctuation in the fair value of the residualaccrue to the lessor, the lease can be classified as a finance lease. Question: True or FalseKnowleage Check UT f the option is reasonably certain to be exercised, how does the inclusion of a provision that gives the lessee the option to purchase the lease asset during the ease term at a specified exercise price impact that accounting for that lease? Note: Select all that apply. Check All That Apply The lessor must classify the lease as a sales-type lease. The lessee has the option of classifying the lease as an operating lease. The lease term is assumed to end on the date that the option is expected to be exercised. In the present value calculations, the lessor adds the present value of the exercise price to the present value of the periodic lease payments to determine the amount recorded as the lease receivable.In finance lease, the amount recorded as asset is the lower amount between: a. the fair value and the present value of the maximum lease payments b. the fair value of the asset and present value of the minimum lease payments c. the fair value and present value of the asset being leased d. the fair value of the minimum lease payments and present value of the asset