The amount of gain (loss) on sale and leaseback transaction is: Group of answer choices The difference of the fair value of rights retained by the lessee and the carrying value of right-of-use asset. The difference of the fair value of rights transferred to the lessor and carrying value of rights transferred to the lessor. The difference of fair value and carrying of the underlying asset. The difference of the fair value of rights retained by the lessee and the carrying value of rights transferred to the lessor.

The amount of gain (loss) on sale and leaseback transaction is: Group of answer choices The difference of the fair value of rights retained by the lessee and the carrying value of right-of-use asset. The difference of the fair value of rights transferred to the lessor and carrying value of rights transferred to the lessor. The difference of fair value and carrying of the underlying asset. The difference of the fair value of rights retained by the lessee and the carrying value of rights transferred to the lessor.

CONCEPTS IN FED.TAX.,2020-W/ACCESS

20th Edition

ISBN:9780357110362

Author:Murphy

Publisher:Murphy

Chapter12: Nonrecognition Transactions

Section: Chapter Questions

Problem 1DQ

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What is the relationship between the book value and the fair value of an asset during the life of the asset?
The amount of gain (loss) on sale and leaseback transaction is: A. The difference of fair value and carrying of the underlying asset. B. The difference of the fair value of rights retained by the lessee and the carrying value of right-of use asset. C. The difference of the fair value of rights retained by the lessee and the carrying value of rights transferred to the lessor. D. The difference of the fair value of rights transferred to the lessor and carrying value of rights transferred to the lessor.
In a sale-leaseback transaction, the right-of-use asset is computed as: Group of answer choices Carrying value of the asset multiplied by the FV of rights retained by the lessee divided by fair value of the asset. Lease liability multiplied by useful life divided by total fair value of the asset. FV of rights retained by the lessee multiplied FV of the asset divided by carrying value of the asset. Rights retained by the lessor multiplied by rights retained by the lessee divided by FV of the asset.
In a sale-leaseback transaction, the right-of-use asset is computed as: a. Rights retained by the lessor multiplied by rights retained by the lessee divided by FV of the asset. b. Carrying value of the asset multiplied by the FV of rights retained by the lessee divided by fair value of the asset. c. Lease liability multiplied by useful life divided by total fair value of the asset. d. FV of rights retained by the lessee multiplied FV of the asset divided by carrying value of the asset.
Explain how an entity would initially and subsequently measure its right-of-use asset and lease liability if the leased asset is classified as investment property under the fair value model? Assuming the fair value of the asset is not given at the end of the period, how will it be best computed? Compare and contrast the lease-related expenses if the entity uses the cost model and fair value model for its right-of-use asset.
What do you think is the main criteria for the recognition of right of use asset and a lease liability on the part of the lessee?
If an entity as lessee presents as investment property a property interest held under an operating lease then the entity 1has the option of measuring some items of investment property using the cost model. 2shall measure in the financial statement all of its investment property using the fair value models 3shall measure that leased property interest under the fair value model and the remaining investment property using the cost model. 4shall measure that leased property interest under the cost model and the remaining investment property either using the cost model or the fair value model.
If the lessor has a substitution right throughout the period of use of the leased asset, which of the following is true? a. Lessor does not have the right to use an identified asset b. Lessor does not own the asset c. Lessee has the right to use an identified asset d. Lessee does not have the right to use an identified asset
If an entity was not able to determine the fair value of both the asset received and the asset given up, which is used in measuring the cost of the asset received? Group of answer choices fair value of the asset given up. fair value of the asset received. either fair value of the asset given up or carrying value of the asset given up carrying value of the asset given up
Which of the following statements is true? Group of answer choices The right-of-use asset is increased by prepaid lease payments and the lessee's initial direct costs, but reduced by lease incentives. The right-of-use asset is increased by prepaid lease payments, but reduced by lease incentives and the lessee's initial direct costs. The right-of-use asset is reduced by the lessee's initial direct costs, but increased by lease incentives and prepaid lease payments. The right-of-use asset is reduced by prepaid lease payments and the lessee's initial direct costs, but increased by lease incentives.
The cost of a nonmonetary asset acquired in exchange for another nonmonetary asset when the exchange has commercial substance is usually recorded at A) either the fair value of the asset given up or the asset received, whichever one results in the largest gain (smallest loss) to the company. B) the fair value of the asset received if it is equally reliable as the fair value of the asset given up. C) the fair value of the asset given up, and a gain or loss is recognized. D) the fair value of the asset given up, and a gain but not a loss may be recognized.
Discuss the residual value of the leased asset. How does it impact the PV of rental payments computation of the Lessee and the computation of the rental payment by Lessor?