D Question 7S1: To be considered as a finance lease, thetitle should be transferred to the lessee at thebeginning of the lease before the lease termcommence in their engagement.S2: IFRS 16 does not provide for aquantitative threshold for low value asset.Therefore, the latter is a matter ofprofessional judgement.S3: Sales type lease includes (a) initial directcost, (b) gross investment, (c) net investmentin the lease, (d) sales, (e) cost of sales, (f)unearned interest income, and (g) grossprofit.one statement is falsetwo statements are false.all statements are trueall statements are false D Question 9Statement 1: Depreciation expense error willself correct in the next year after the momentof erroneous entry.Statement 2: Failure to record the accruedsalaries at the end of reporting period resultsin overstated retained earningsStatement 3: Combined Financial Statementsprovide information about assets, liabilities,equity, income and expenses of both theparent and its subsidiaries as a singlereporting entity.one statement is trueone statement is falseall statements are falseall statements are true

Answer to Question 7 : One Statement is False. (S1 is false). Explanation : S1 : As per IFRS 16, To…

Statement 1: Depreciation expense error wil self correct in the next year after the momer of erroneous entry. Statement 2: Failure to record the accrued salaries at the end of reporting period results in overstated retained earnings Statement 3: Combined Financial Statement provide information about assets, liabilities, equity, income and expenses of both the parent and its subsidiaries as a single reporting entity. one statement is true one statement is false all statements are false all statements are true

Statement 1: Depreciation expense error wil self correct in the next year after the momer of erroneous entry. Statement 2: Failure to record the accrued salaries at the end of reporting period results in overstated retained earnings Statement 3: Combined Financial Statement provide information about assets, liabilities, equity, income and expenses of both the parent and its subsidiaries as a single reporting entity. one statement is true one statement is false all statements are false all statements are true

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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(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.
1. Which statement is incorrect about initial direct costs? a. Initial direct costs incurred by the lessee in finance lase are added to the amount recognized as an asset and to the finance lease liability. b. In a direct financing lease, initial direct costs are added to the net investment in the lease. c. In a sales type lease, initial direct costs are expensed as component of cost of goods sold. d. For operating leases, initial direct costs are deferred and allocated over the lease term. 2. If the lessor and lessee use different interest rates to account for a finance lease, then a. The lessor will use different account titles to record the leasing transactions b. Total expenses and revenues will be equal c. Total expenses and revenues will be different d. The lessee and the lessor cannot use different interest rates 3. In the case of a lease of land and building where title to the land is not transferred, the lease is generally treated as if: a. Both land and building are finance…
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
12.Which of the following statements correctly describes the initial measurement of a lease liability by a lessee under IFRS? Select one: a. The cost of any bargain purchase option is included in the calculation of the lease liability b. The lease liability is discounted to its present value using the lessee’s incremental borrowing rate c. Guaranteed and unguaranteed residual values are included in the calculation of the lease liability at initial measurement d. All variable lease payments are included in the calculation of the lease liability at initial measurement
D2. If a lease does not transfer control of the asset over the lease term, the lessor will generally account for the lease as a sales-type lease. true false
29 Lessors shall recognize assets held under a finance lease in a statement of financial position as a receivable at an amount equal to theA. gross investment in the lease B. net investment in the lease C. gross rentals D. residual value, whether guaranteed or unguaranteed
4. Initial direct costs incurred by the lessor in connection with specific leasing activities as in negotiating and securing leasing arrangements in a direct finance lease would a. result to an increase of the implicit interest rate. b. result to a decrease of the implicit interest rate. c. result to either an increase or a decrease of the implicit interest rate depending on the given facts. d. be ignored if the lease qualifies as a dealer's lease.
The residual value is the estimated fair value of the leased property at the end of the lease term. a. Of what significance is (1) an unguaranteed and (2) a guaranteed residual value in the lessee's accounting for a finance lease transaction? b. Distinguish between lease payments used to determine lease classification compared to lease payments for measuring the lease liability.
If a sale and leaseback transaction results in a finance lease, any excess of sale proceeds over the carrying amount shall beI. Recognized immediately as income by the seller-lessee.II. Deferred and amortized as income by the seller-lessee over the lease term. Either I or II II only I only Neither I nor II
IFRS(a) What is included in the measurement of (1) the lease liability and (2) the right-ofuse asset?(b) Besides the non-cancelable term of the lease, what are other considerations indetermining the “lease term”?(c) When should a lessee account for a lease modification? What procedures arefollowed?
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.
f the lessor meets any one of the five Group I criteria, then the lessor classifies the lease as a(n) ________. If the lessor meets both of the Group II criteria, but none of the Group I criteria, then the lessor classifies the lease as a(n) ________. If the transaction does not meet either the Group I or Group II criteria, then the lessor classifies the lease as a(n) ________. Group of answer choices operating lease; direct financing lease; sales-type lease direct financing lease; operating lease; sales-type lease sales-type lease; direct financing lease; operating lease standalone price lease; sales-type lease; direct financing lease