When a lessor actually sells an asset that it has been leasing, the difference between the sales price and the carrying amount of the lease receivable is recognized in profit or loss. d. The gain or loss that pertains to the right retained by the seller-lessee in a sales and leaseback transaction is not recognized

When a lessor actually sells an asset that it has been leasing, the difference between the sales price and the carrying amount of the lease receivable is recognized in profit or loss. d. The gain or loss that pertains to the right retained by the seller-lessee in a sales and leaseback transaction is not recognized

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter19: Lease Financing

Section: Chapter Questions

Problem 8Q

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Similar questions

Which of the following statements are false under a sale a leaseback transaction? I. If a sale and leaseback transactions results in a finance lease, any excess of proceeds over the carrying amount shall not be immediately recognized as income by a seller-lessee. Instead, it shall be deferred and amortized over the lease term. II. If the sale price is established at fair value under an operating lease, any gain or loss shall be deferred and amortized over the period which the asset is expected to be used. I only II ONLY BOTH I AND II NEITHER I OR II
Which of the following statements about purchase option is correct? a. None of the other choices is correct. b. Its present value is added to get the lease liability if it is reasonably certain that it will be exercised. c. it is ignored if the leased asset reverts back to the lessor at the end of the useful life. d. The lessee includes its present value on the computation of lease liability only if it is guaranteed.
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.
Statement 1: When the residual value guaranteed by the lessee at the end of lease term is higher than the fair value of the underlying asset, settlement shall be made by the lessee and recognized as a loss.Statement 2: When the residual value guaranteed by the lessee at the end of lease term is higher than the fair value of the underlying asset, no settlement shall be made by the lessee and no recognition of any gain or loss. Group of answer choices Only statement 2 is correct Only statement 1 is correct Both statements are correct Both statements are incorrect.
Statement 1: The lessor will recognized the same gross profit whether the residual value is guaranteed by the lessee or not guaranteed by the lessee. Statement 2: Any initial direct cost paid by the lessor shall reduce the amount of unearned interest income that the lessor shall recognized at inception of the lease. Only statement 2 is correct O Both statements are correct O Both statements are incorrect. Only statement 1 is correct
Which of the following is not included in the evaluation questions of IFRS 16 in identifying a lease contract? a. Does the lessee have the right to obtain all of the economic benefits from the use of the asset? b. Does the lessee direct the use of the identified asset throughout the period of use? c. Does the lessor have a substitution right over the asset? d. Is there an identified asset?
25. What is the remedy available to vendor or lessor when the vendee or lessee fails to pay a single instalment or single periodic rental in an instalment sale or finance lease of personal property assuming a chattel mortgaged is constituted on the personal property sold or leased? Group of answer choices a. Exact fulfilment of the obligation with right to recovery for deficiency b. Cancel the instalment sale or finance lease resulting to mutual restitution c. Foreclose the chattel mortgage on the personal property sold or leased d. Any of the above
In a finance lease by the lessee, the leased asset is depreciated on a systematic basis consistent with the depreciation policy of the lessee. If the the lease is only for a short term and of low value, and the lease contract did not mention as to the classification of such lease nor did it contain transfer of ownership and a reasonable certainty as to the purchase option's exercisability, depreciation by the lessee is a. Based on the useful life of the leased asset. b. Based on the lease term. c. Based on the shorter of the lease term or the useful life of the asset. d. Not recognized since the lease is an operating lease and the depreciation expense shall be shouldered by the lessor who retains ownership of the leased asset.
Guaranteed residual value is a fixed amount required by the lessor at the termination of the lease only in the absence of a purchase option. a. TRUE b. FALSE
12.In an "asset swap," where a liability is settled liability is settled through the transfer of noncash asset, a. the gain or loss on settlement is computed as the difference between the carrying amount of the liability extinguished and the fair value of the noncash asset transferred. b.the gain or loss on settlement is computed as the difference between the carrying amount of the liability extinguished and the carrying amount of the noncash asset transferred. c. the gain or loss on settlement is computed as the difference between the carrying amount of the liability extinguished and the more clearly determinable between the fair value of the liability extinguished and the carrying amount of the noncash asset transferred. d. no gain or loss is recognized
23. Which of the following is true regarding IFRS 16? * a. Lessors shall recognize assets held under a contract of lease as a receivable at an amount equal to the net investment in the lease. b. Lessors shall recognize assets held under a contract of lease as a receivable at an amount equal to the cost of the asset which is the subject of the lease. c. Lessors shall recognize assets held under a finance lease as a receivable at an amount equal to the net investment in the lease. d. Lessors shall recognize assets held under a finance lease as a receivable at an amount equal to the cost of the asset which is the subject of the lease less any initial direct cost paid by the lessor.
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.