INTERMEDIATE ACCOUNTING (ACCT 3200A)
10th Edition
ISBN: 9781307660630
Author: SPICELAND
Publisher: MCG CUSTOM
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Chapter 15, Problem 15.38E
(1)
To determine
Financial Accounting Standards Board
It is commonly known as FASB. It is a private, non-profit organization which is a standard setting body. The main purpose of the FASB is to create and improve GAAP (Generally Accepted Accounting Principles) within the US. GAAP is a collection of generally practiced and followed rules and standards of accounting. GAAP provides global guidelines for preparation and disclosure of financial statements of public companies.
To Obtain: relevant authoritative literature on when the lessee should reassess the term of the lease.
(2)
To determine
To List: the disclosure requirements.
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Check out a sample textbook solutionStudents have asked these similar questions
AASB 16/IFRS 16 defines a lease as:
Select one:
A.
a contract, or part of a contract, that conveys the right to transfer a liability for a period of time in exchange for an asset.
B.
a contract that conveys the right for the lessor to obtain substantially all of the economic benefits of the identified asset.
C.
a contract, or part of a contract, that conveys the right to use an asset (the underlying asset) for a period of time in exchange for consideration.
D.
a contract, or part of a contract, that conveys the right to transfer ownership of an asset (the underlying asset) for a period of time in exchange for consideration.
Part 1: New Lease Accounting –IFRS 16 Leases Effect Analysis.
Identify differences between IFRS 16 and U.S. GAAP new lease accounting (ASC Topic 842). Based on these differences, discuss which one (IFRS or U.S. GAAP) you favor and why?
Discuss three main features of the two transition methods for lessees under ASC 842 and IFRS 16. Which transition method would investors likely prefer? Why? Which transition method may be preferred by companies? Why?
33. Because IFRS is very general in its provisions for lease accounting, the required disclosures for leases under IFRS
are more detailed and extensive than those required under GAAP
are less detailed and extensive than those required under GAAP
are detailed than those required under GAAP
none of the above
Chapter 15 Solutions
INTERMEDIATE ACCOUNTING (ACCT 3200A)
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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Similar questions
- 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.arrow_forwardIFRS 16 states that lessors shall recognize assets held under finance lease as a receivable at an amount equal to the gross investment in the lease. a. TRUE b. FALSEarrow_forwardIn Note 4, “Summary of accounting policies,” part 4.14, “Leases,” AF states that“leases are classified as finance leases when the lease arrangement transferssubstantially all the risks and rewards of ownership to the lessee.” Is this the policycompanies using U.S. GAAP follow?arrow_forward
- What was the major change in accounting for leases introduced by new accounting standard AASB 16 IFRS 16? Discuss the accounting treatment for leases and who are impacted by these changes.arrow_forwardD6) Describe the criteria that the lessee must utilize when determining whether a lease is to be treated as a finance lease or as an operating lease according to ASC 842. Original answer.arrow_forwardExplain the key differences in accounting for leases under IAS 17 and IFRS 16arrow_forward
- PROBLEM 1: TRUE OR FALSE 1. According to PFRS 16 Leases, a lessee shall classify each of its leases into a finance lease or an operating lease. 2. A contract is (or contains) a lease if it conveys the right to control the use an identified asset for a period of time in exchange for consideration. 3. An underlying asset is not considered an identified asset for the purpose of applying the accounting requirements of PFRS 16 if the supplier's substitution right is not substantive. 4. The current view on accounting for leases by lessees is that all leases are 'on-balance sheet' items, with very minimal exceptions. 5. In most leases, a lessee recognizes an asset and a liability at the commencement date. 6. According to PFRS 16, lease payments include any amount to be paid for purchase options that are reasonably certain to be exercised and amounts that are expected to be paid under residual value guarantees. 7. The lessee always uses its incremental borrowing rate in determining the present…arrow_forwardIFRS 16 states that lessors shall recognize assets held under finance lease as a receivable at an amount equal to the gross investment in the lease. * True or false?arrow_forwardthe core principle of the new accounting standard (IFRS 16) is that an entity shall recognise assets and liabilities arising from a lease. Select one alternative: True Falsearrow_forward
- Q.8. Identify possible adverse effects on a lessee entity’s financial statements arising from the classification of a lease arrangement as finance lease.arrow_forwardAccess the FASB Accounting Standards Codification at the FASB website ( asc.fasb.org ) Required: Determine the specific citation for accounting for each of the following items: 1. If it is only reasonably possible that a contingent loss will occur, the contingent loss should be disclosed. 2. Criteria allowing short-term liabilities expected to be refinanced to be classified as long-term liabilities. 3. Accounting for the revenue from separately priced extended warranty contracts. 4. The criteria to determine if an employer must accrue a liability for vacation pay.arrow_forwardPart 1: New Lease Accounting – using IFRS 16 Leases Effect Analysis. Which payments are to be included in the measurement of lease assets and lease liabilities? Also, discuss the pros and cons of excluding the following payments from the measurement. - Variable lease payments linked to future use or sales - Optional payments relating to lease-extension option when a lessee is not reasonably certain to exercise the option.arrow_forward
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