Types of lease* The following terms are often used to describe leases: a. Direct b. Full-service c. Operating d. Financial e. Net f. Leveraged g. Sale and lease-back Match one or more of these terms with each of the following statements: A. The initial lease period is shorter than the economic life of the asset. B. The initial lease period is long enough for the lessor to recover the cost of the asset. C. The lessor provides maintenance and insurance. D. The lessee provides maintenance and insurance. E. The lessor buys the equipment from the manufacturer. F. The lessor buys the equipment from the prospective lessee. G. The lessor finances the lease contract by issuing debt and equity claims against it.

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Answer 1

Textbook Question

Chapter 25, Problem 1PS

Types of lease* The following terms are often used to describe leases:

a. Direct
b. Full-service
c. Operating
d. Financial
e. Net
f. Leveraged
g. Sale and lease-back

Match one or more of these terms with each of the following statements:

A. The initial lease period is shorter than the economic life of the asset.
B. The initial lease period is long enough for the lessor to recover the cost of the asset.
C. The lessor provides maintenance and insurance.
D. The lessee provides maintenance and insurance.
E. The lessor buys the equipment from the manufacturer.
F. The lessor buys the equipment from the prospective lessee.
G. The lessor finances the lease contract by issuing debt and equity claims against it.

Expert Solution & Answer

Summary Introduction

To discuss: Match the given terms with the suitable statements.

Explanation of Solution

The given terms are matched with the appropriate statements as follows:

PRIN.OF CORPORATE FINANCE >BI<, Chapter 25, Problem 1PS

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Students have asked these similar questions

Which of the following statements is characteristic of leases? a.If a lease is classified as an operating lease, the lessee records an asset on its statement of financial position. b.Lease agreements are not a popular form of financing the purchase of assets because leases require a large initial outlay of cash. c.If a lessor classifies a lease as a finance lease, the lessor records a lease liability on its statement of earnings. d.Accounting recognizes two types of leases—operating and finance.

Which type of lease will not increase a company’s assets or long-term liabilities? Select one: a. A one-year operating lease b. A lease for an asset of a specialized nature with no alternative use at the end of the lease term c. A finance lease d. A lease that transfers ownership of the asset to the lessee by the end of the lease term

(Comparison of Different Types of Accounting by Lessee and Lessor)Part 1: Capital leases and operating leases are the two classifications of leases described in FASB pronouncements from the standpoint of the lessee.Instructions(a) Describe how a capital lease would be accounted for by the lessee both at the inception of the lease and during the first year of the lease, assuming the lease transfers ownership of the property to the lessee by the end of the lease.(b) Describe how an operating lease would be accounted for by the lessee both at the inception of the lease and during the first year of the lease, assuming equal monthly payments are made by the lessee at the beginning of each month of the lease. Describe the change in accounting, if any, when rental payments are not made on a straight-line basis.Do not discuss the criteria for distinguishing between capital leases and operating leases.Part 2: Sales-type leases and direct-financing leases are two of the classifications of leases…

Answer 2

Textbook Question

Chapter 25, Problem 1PS

Types of lease* The following terms are often used to describe leases:

a. Direct
b. Full-service
c. Operating
d. Financial
e. Net
f. Leveraged
g. Sale and lease-back

Match one or more of these terms with each of the following statements:

A. The initial lease period is shorter than the economic life of the asset.
B. The initial lease period is long enough for the lessor to recover the cost of the asset.
C. The lessor provides maintenance and insurance.
D. The lessee provides maintenance and insurance.
E. The lessor buys the equipment from the manufacturer.
F. The lessor buys the equipment from the prospective lessee.
G. The lessor finances the lease contract by issuing debt and equity claims against it.

Expert Solution & Answer

Summary Introduction

To discuss: Match the given terms with the suitable statements.

Explanation of Solution

The given terms are matched with the appropriate statements as follows:

PRIN.OF CORPORATE FINANCE >BI<, Chapter 25, Problem 1PS

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Answer 3

Textbook Question

Chapter 25, Problem 1PS

Types of lease* The following terms are often used to describe leases:

a. Direct
b. Full-service
c. Operating
d. Financial
e. Net
f. Leveraged
g. Sale and lease-back

Match one or more of these terms with each of the following statements:

A. The initial lease period is shorter than the economic life of the asset.
B. The initial lease period is long enough for the lessor to recover the cost of the asset.
C. The lessor provides maintenance and insurance.
D. The lessee provides maintenance and insurance.
E. The lessor buys the equipment from the manufacturer.
F. The lessor buys the equipment from the prospective lessee.
G. The lessor finances the lease contract by issuing debt and equity claims against it.

Expert Solution & Answer

Summary Introduction

To discuss: Match the given terms with the suitable statements.

Explanation of Solution

The given terms are matched with the appropriate statements as follows:

PRIN.OF CORPORATE FINANCE >BI<, Chapter 25, Problem 1PS

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Answer 4

Textbook Question

Chapter 25, Problem 1PS

Types of lease* The following terms are often used to describe leases:

a. Direct
b. Full-service
c. Operating
d. Financial
e. Net
f. Leveraged
g. Sale and lease-back

Match one or more of these terms with each of the following statements:

A. The initial lease period is shorter than the economic life of the asset.
B. The initial lease period is long enough for the lessor to recover the cost of the asset.
C. The lessor provides maintenance and insurance.
D. The lessee provides maintenance and insurance.
E. The lessor buys the equipment from the manufacturer.
F. The lessor buys the equipment from the prospective lessee.
G. The lessor finances the lease contract by issuing debt and equity claims against it.

Expert Solution & Answer

Summary Introduction

To discuss: Match the given terms with the suitable statements.

Explanation of Solution

The given terms are matched with the appropriate statements as follows:

PRIN.OF CORPORATE FINANCE >BI<, Chapter 25, Problem 1PS

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Answer 5

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Answer 6

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Answer 7

Expert Solution & Answer

Summary Introduction

To discuss: Match the given terms with the suitable statements.

Explanation of Solution

The given terms are matched with the appropriate statements as follows:

PRIN.OF CORPORATE FINANCE >BI<, Chapter 25, Problem 1PS

Answer 8

Expert Solution & Answer

Summary Introduction

To discuss: Match the given terms with the suitable statements.

Explanation of Solution

The given terms are matched with the appropriate statements as follows:

PRIN.OF CORPORATE FINANCE >BI<, Chapter 25, Problem 1PS

Answer 9

Expert Solution & Answer

Answer 10

Expert Solution & Answer

Answer 11

Summary Introduction

To discuss: Match the given terms with the suitable statements.

Answer 12

Explanation of Solution

The given terms are matched with the appropriate statements as follows:

PRIN.OF CORPORATE FINANCE >BI<, Chapter 25, Problem 1PS

Answer 13

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