Q: Which of the following is not included in the lease payments for the purpose of computing the lease…
A: This question deals with the IFRS 16 "Leases". When lessee lease the asset from the lessor then…
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: A lease that transfers substantially all the risks and rewards incidental to ownership of an…
A: A lease is normally called as finance lease if any of the following conditions are satisfied, The…
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Q: True or False Lease payments are paid by the lessor.
A: Lessor is the legal owner of the property.Lessor leases the property he owns to lessee for rental…
Q: 1. Which statement is incorrect about initial direct costs? a. Initial direct costs incurred by the…
A: Initial direct costs are incremental cost of a lease that would not have been incurred if lease has…
Q: What is the theoretical basis for the accounting standard that requires certain long-term leases to…
A: Lease: Lease is a contractual agreement whereby the right to use an asset for a particular period of…
Q: What is the difference between an “operating” and a “capital” lease? In easy terms please!
A: The criteria for defining the lease as a capital lease or operating lease As per the notes issued…
Q: When are initial direct costs recognized in an operating lease? In a sales-type lease with selling…
A: Initial direct cost paid by the lessee is added to the right-of-use asset. If incurred by the…
Q: Lease payments are payments made by a lessee to a lessor relating to the right to use an underlying…
A: The standard states that lease payments for the lessee includes the following a.) Exercise price of…
Q: A lessor will record interest income if a lease is classifi ed as:A . a capital lease.B . an…
A: Introduction: Leasing is a mechanism by which the company may receive certain capital assets for…
Q: At the inception of a capital lease, the guaranteed residual value should be a. Included as part of…
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Q: Which one of the following accurately describes an aspect /aspects of a leveraged lease? I. The…
A: The question is related to the Leveraged Lease. In a leveraged lease, the lessor invests some money…
Q: The residual value is the estimated fair value of the leased property at the end of the lease term.…
A: Finance lease is also known as capital lease.This is a long term lease agreement in which the lessee…
Q: Explain the impact on lease accounting of other payments, including nonleasepayments, initial direct…
A: Uncertainties in lease transactions: There are several issues with respect to lease transactions…
Q: Which one of the following definitions is/are correct? I. A lease between a lessor and the…
A: 1) Incorrect: Direct lease is the lease between manufacture or dealer(which is lessor) and user…
Q: In finance lease, the amount recorded as asset is the lower amount between: a. the fair value and…
A: Lease is a contract between two parties in which one party provides its asset for use to another…
Q: What are the benefits to lessees of operating lease accounting?
A: Operating lease: The operating lease refers to the contract between two parties where one party…
Q: his type of lease involves recognition of a manufacturer’s or dealer’s profit or loss on the…
A: Step 1 In a sales-type lease, the lesser is assumed to be selling a product to the lessee, which…
Q: Assume a lessee leases equipment and insists on terms that qualify it as an operating lease, barely…
A: In simple term lease means it was a specific contract or agreement between the two parts to use the…
Q: Explain the distinction between a direct-financing leaseand a sales-type lease for a lessor.
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Q: initial direct costs incurred in relation to a lease transaction is added to A)the cost of sales…
A: In lease accounting the initial costs directly incurred in a lease transaction are to be considered…
Q: When a lease qualifies as a finance lease, what amount is initially recorded as the cost of the…
A: Solution Concept In case of finance lease , The initial cost of right of use asset include…
Q: Under IFRS, in computing the present value of the minimum lease payments, the lessee should:(a) use…
A: Minimum lease payment: An amount which is payable to the lessor by the lessee when the lease…
Q: When are initial direct costs recognized in an operating lease? In a direct financing lease? In a…
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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: In a lease that is not assified as a manufacturer's ase, initial direct cost is * a. added to the…
A: Solution: In a lease that is not classified as a manufacturer's lease, initial direct cost is "added…
Q: TRUE OR FALSE: in a sales type lease the net investment in the lease is credited to the appropriate…
A: Lease is a financial transaction where one party, the lessor leases his asset to another party…
Q: Which of the following statements characterizes a sales-type lease? A)The lessor recognizes only…
A: SOLUTION- SALES TYPE LEASE IS A FINANCE LEASE IN WHICH THE FAIR MARKET VALUE (OR IF LOWER , THE PV…
Q: Why does a finance lease is economically similar to a purchase of the asset?
A: There are many similarities between purchase of a asset and Finance lease, such as: In a finance…
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: .The initial direct costs of leasing * , O All of these answers are true with regard to the initial…
A: Initial direct cost of leasing:- It is the cost which is generally incurred by the lessor in…
Q: Net investment in a sales-type lease is equal to
A: Net investment in sales type lease is recognized by lessor as amount of lease receivable. Option (a)…
Q: Net investment in a sales-type lease is equal to Gross investment less unearned financing revenue…
A: Sales-type lease is a type of lease where the lessor is assumed to sell the property to lessee.…
Q: In a sale-leaseback transaction, the lease liability is equals to: A. PV of lease payments accruing…
A: Sale and leaseback transaction refers to the transaction where the asset is first sold by the seller…
Q: Occasionally, a lease agreement includes a guarantee by the lessee that the lessor will recover a…
A:
Q: Compare the benefits and drawbacks to long-term vs. short-term leases from EITHER the point of view…
A: Lease refers to the contract between the parties in which one party agrees for renting an asset…
Q: What is the difference between a lease receivable and a net investment in the lease?
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Q: There are two parties in any lease contract—the lessee and the lessor. To a lessor, a lease analysis…
A: The step involved will be: Determining the lease payments minus income taxes and any expenses…
Q: The initial direct costs incurred in relation to a lease transaction is added to get the right of…
A: The initial direct costs incurred in relation to a lease transaction is added to get the right of…
Q: When both the gross investment and cost of the leased asset is equal for both direct and sales-type…
A: A lease is a contractual agreement between two parties wherein the lessor (owner) provides the right…
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. True or false explain
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- What is the basic difference between the accounting procedures used by a lessor for a sales-type lease and those used for a direct-financing lease?There are two parties in any lease contract—the lessee and the lessor. To a lessor, a lease analysis involves a capital budgeting analysis of the property or equipment to be leased. The lessor’s decision is either to purchase and lease-out the asset, or not make the investment at all. Like any capital budgeting decision, the lessor needs to evaluate the rate of return expected to be earned from making the lease. Further, since the cost and other terms of leases involving high-cost items are negotiated, this rate of return information is also important information for a prospective lessee. From the following statements, identify the steps involved in lease analysis from a lessor’s perspective. Check all that apply. Determine the lease payments minus income taxes and any maintenance expenses that the lessor must incur as per the lease agreement. Determine the invoice price of the leased equipment minus any lease payments made in advance. Determine the periodic…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
- 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.We classify a lease as a finance lease if: Multiple Choice the present value of lease payments is less than the asset's book value. the present value of lease payments is less than the asset's fair value. the lessee obtains control of the use of the asset. the usual risks and rewards are retained by the lessor.The initial direct costs incurred in relation to a lease transaction is added to A)the cost of sales of lessee under a sales-type lease B)get the net investment for the lessor under a direct finance lease C)get the net investment for the lessor under a sales-type lease D)get the right of use asset for the lessor
- The initial direct costs incurred in relation to a lease transaction is added to get the right of use asset for the lessor get the net investment for the lessor under a sales-type lease the cost of sales of lessee under a sales-type lease get the net investment for the lessor under a direct finance lease1. 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…Net investment in a sales-type lease is equal to A)the minimum lease payments less unguaranteed residual value B)the minimum lease payments C)Gross investment less unearned financing revenue D)Cost of the leased asset
- 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. 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 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…Which of the following statements is/are not true? Interest expense on the lease liability will increase the carrying amount of the liability. A lessee shall measure the lease liability at the present value of the lease payments that are not paid at that date, using the lessee's incremental borrowing rate. Right-of-use asset cost will include an estimates cost to be incurred by the lessee in dismantling and removing the underlying asset, restoring the site on which it is located or restoring the underlying asset to the condition required by the terms and conditions of the lease. Group of answer choices Only statement 2. All statements are true. Only statements 2 and 3. None of the statements are true.Net investment in a sales-type lease is equal to Gross investment less unearned financing revenue Cost of the leased asset the minimum lease payments less unguaranteed residual value the minimum lease payments
