11. Which of the following is an appropriate journal entry for the initial recognition by a lessee of a finance lease arrangement? Select one: a. DR Leased asset CR Bank loan b. DR Cash CR
11. Which of the following is an appropriate journal entry for the initial recognition by a lessee of a finance lease arrangement? Select one: a. DR Leased asset CR Bank loan b. DR Cash CR
11. Which of the following is an appropriate journal entry for the initial recognition by a lessee of a finance lease arrangement? Select one: a. DR Leased asset CR Bank loan b. DR Cash CR
11. Which of the following is an appropriate journal entry for the initial recognition by a lessee of a finance lease arrangement?
Select one:
a. DR Leased asset CR Bank loan
b. DR Cash CR Leased asset
c. DR Leased liability CR Leased asset
d. DR Leased asset CR Lease liability
12. The following lease details relate to a finance lease arrangement between Crebarn (the lessor) and Balwane (the lessee). The lease term is 3 years; 3 lease payments of $60,000 each are to be made annually in advance; a guaranteed residual of $40,000 is payable at the end of the lease term; the implicit interest rate is 13%. The present value of the lease liability is:
Select one:
a. $180,000.
b. $187,808;
c. $220,000;
d. $191,400;
13. The following information relates to a lease between Canneries Limited (lessor) and Fruiterers Limited (lessee). 3 lease payments of $20,000 each are made annually in advance and a final lease payment of $15,000 is made at the end of the 3 year lease term. The implicit interest rate is 10%. The amount of the interest expense that is recognised in the first year of the lease is:
Select one:
a. $15,402;
b. $7,500.
c. $4,598;
d. $6,598;
14. Which of the following is an appropriate journal entry for the initial recognition by a lessor of a finance lease arrangement?
Select one:
a. DR Leased asset CR Cash/Accounts payable
b. DR Leased asset CR Cash
c. DR Lease receivable CR Asset
d. DR Lease receivable CR Lease liability
16. A sale and leaseback transaction involves the sale of an asset that is then leased back to the
Select one:
a. lessor;
b. acquiring entity;
c. original owner;
d. purchaser.
17. Where a lessee does not expect to purchase a leased asset, the asset must be depreciated across:
Select one:
a. its useful life;
b. a period not exceeding 5 years;
c. the full economic life of the asset;
d. the shorter of the lease term or 20 years.
Definition Definition Method of recording financial transactions in the book of original entry by debiting and crediting the accounts affected by a transaction using the golden rules of accrual accounting.
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