Intermediate Accounting, 10 Ed
10th Edition
ISBN: 9781260310177
Author: Mark W. Nelson, Wayne B. Thomas J. David Spiceland
Publisher: McGraw-Hill Education
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Textbook Question
Chapter 15, Problem 15.29Q
When a company sells an asset and simultaneously leases it back, what criteria must be met to apply sale-leaseback accounting rather than accounting for the transaction as a loan ?
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Students have asked these similar questions
When a company sells an asset and simultaneously leases it back, what criteria must be met to apply saleleaseback accounting rather than accounting for the transaction as a loan ?
In a sale-leaseback transaction the owner of an asset sells it and immediately leases it back from the new owner. This dual transaction should be viewed as a single borrowing transaction. Why?
In a sale and leaseback transaction, which of the following statements is most incorrect?
A. The seller-lessee records a rent expense.
B. The buyer-lessor recognizes an gain.
C. The seller-lessee derecognizes an asset.
D. The buyer lessor recognizes an income.
Chapter 15 Solutions
Intermediate Accounting, 10 Ed
Ch. 15 - Prob. 15.2QCh. 15 - Prob. 15.3QCh. 15 - Prob. 15.4QCh. 15 - A lessee should classify a lease transaction as a...Ch. 15 - Lukawitz Industries leased non-specialized...Ch. 15 - In accounting for a finance lease/sales-type...Ch. 15 - What is selling profit on a sales-type lease? How...Ch. 15 - At the beginning of an operating lease, the lessee...Ch. 15 - At the beginning of an operating lease, the lessor...Ch. 15 - In accounting for an operating lease, how are the...
Ch. 15 - Briefly describe the conceptual basis for asset...Ch. 15 - In a financing lease, front loading of lease...Ch. 15 - The discount rate influences virtually every...Ch. 15 - A lease that has a lease term (including any...Ch. 15 - A lease might specify that lease payments may be...Ch. 15 - What is a purchase option? How does it affect...Ch. 15 - A six-year lease can be renewed for two additional...Ch. 15 - Culinary Creations leased kitchen equipment under...Ch. 15 - What situations cause us to remeasure a lease...Ch. 15 - Prob. 15.21QCh. 15 - Compare the way a purchase option that is...Ch. 15 - What nonlease costs might be included as part of...Ch. 15 - The lessors initial direct costs often are...Ch. 15 - When are initial direct costs recognized in an...Ch. 15 - Prob. 15.26QCh. 15 - Prob. 15.27QCh. 15 - Prob. 15.28QCh. 15 - When a company sells an asset and simultaneously...Ch. 15 - Prob. 15.30QCh. 15 - Lease classification LO151 (Note: Brief Exercises...Ch. 15 - Lease classification LO151, LO152 Corinth Co....Ch. 15 - Lessee and lessor; calculate interest;...Ch. 15 - Finance lease; lessee; balance sheet effects ...Ch. 15 - Finance lease; lessee; income statement effects ...Ch. 15 - Sales-type lease; lessor; income statement effects...Ch. 15 - Prob. 15.7BECh. 15 - Operating lease LO154 (Note: Brief Exercises 8...Ch. 15 - Operating lease LO154 At the beginning of its...Ch. 15 - Short-term lease LO155 King Cones leased ice...Ch. 15 - Uncertain lease term LO156 Java Hut leased a...Ch. 15 - Uncertain lease payments LO156 On January 1,...Ch. 15 - Purchase option; lessor; sales-type lease LO152,...Ch. 15 - Residual value; sales-type lease LO152, LO153,...Ch. 15 - Guarantee d residual value LO156 On January 1,...Ch. 15 - Lessors initial direct costs; sales-type lease ...Ch. 15 - Lease classification LO151 Each of the four...Ch. 15 - Prob. 15.9ECh. 15 - Lessor calculation of annual lease payments;...Ch. 15 - Sales-type lease; lessor; income statement effects...Ch. 15 - Calculation of annual lease payments; residual...Ch. 15 - Lease concepts; finance/sales-type leases;...Ch. 15 - Calculation of annual lease payments; purchase...Ch. 15 - Prob. 15.37ECh. 15 - Prob. 15.38ECh. 15 - Prob. 15.39ECh. 15 - Lessors initial direct costs; operating and...Ch. 15 - Research Case 151 FASB codification; locate and...Ch. 15 - Ethics Case 153 Leasehold improvements LO153...Ch. 15 - Communication Case 155 Wheres the gain? Appendix...Ch. 15 - Prob. 15.6DMPCh. 15 - Prob. 1CCTCCh. 15 - Prob. 2CCTC
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Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Why are compound interest concepts appropriate and applicable in accounting for a sales-type lease?arrow_forwardMetheny Corporation's lease arrangements qualify as sales-type leases at the time of entering into the transactions. How should the corporation recognize sales revenue and cost of goods sold in these situations?arrow_forwardWhich of the following is not one of the classifications for leases from the lessor’s viewpoint? Operating. Sales-type. Direct financing. Off-balance sheet.arrow_forward
- How does the analysis of a sale-leaseback differ from the analysis of owning versus leasing?arrow_forwardFor a(n) ________ lease, a lessor recognizes revenue on the sale and records the asset, ________ lease. It also removes the leased asset from its accounts and records the ________. Group of answer choices sales-type; net investment in lease–sales-type; cost of goods sold finance; gross investment in lease–sales-type; cost of goods sold operating; net investment in lease–sales-type; cost of goods sold sales-type; finance; revenuearrow_forwardOf what significance is (a) an unguaranteed and (b) a guaranteed residual value in the lessor's accounting for a sales-type lease transaction?arrow_forward
- Off-Balance Sheet Financing What is meant by the term “off-balance sheet financing”? When do leases provide such financing and what are the accounting and economic consequences of such activity?arrow_forwardThe accounting concept that is principally used to classify leases into operating and finance is a. Prudence b. Neutrality c. Substance over form d. Completenessarrow_forwardIFRS distinguishes between sales-type and direct financing leases for lessors. True or Falsearrow_forward
- Generally accepted accounting principles require that certain leaseagreements be accounted for as purchases. The theoretical basis for thistreatment is that a lease of this type A. Effectively conveys all of the benefits and risks incident to the ownership of property B. Is an example of form over substance C. Provides the use of the leased asset to the lessee for a limited period of time D. Must be recorded in accordance with the concept of cause and effectarrow_forwardWhich 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 IIarrow_forwardOne of the following statements is false: a. If the underlying asset will not revert to the lessor, the residual value is simply ignored by the lessor in the computation of unearned interest income and gross profit on the sale. b. The underlying asset will remain with the lessee if the lease provides for either a purchase option that is reasonably to be exercised or transfer of title to the lessee upon the lease expiration. c. 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.arrow_forward
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