A short-term lease is defined as CHOICES 2-year lease with option to terminate 12 months or less 6 months or less 12-month lease with a purchase option
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A:
Q: Each of the four independent situations below describes a finance lease in which annual lease…
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A:
A short-term lease is defined as
CHOICES
2-year lease with option to terminate
12 months or less
6 months or less
12-month lease with a purchase option
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- A lease that has a lease term (including any options to terminate or renew that are reasonably certain) of twelve months or less is considered a “short-term lease.” How does a lessee record a lease using the short-cut approach available as an option for short-term leases?A lease that has a lease term (including any options to terminate or renew that are reasonably certain) of twelve months or less is considered a “short-term lease.” How does a lessee record a lease using the shortcut approach available as an option for short-term leases?sharad
- HardevWhat is the proper accounting treatment to record a variable lease payment indexed off the CPI? Group of answer choices Record the lease liability based on highest annual increase in the CPI for the past 10 years. Calculate the lease liability based on the base payment and debit an additional expense in subsequent years based on the change in the CPI. Calculate the lease liability based on expected payments over the life of the lease after considering increases in the CPI. Capitalize and depreciate the increased payments based on CPI indexing.Visno
- Classifying Leases The following separate scenarios relate to a 5-year lease, pertaining to equipment with a fair value of $50,000. Assume in all scenarios that payments are made at the beginning of the period. 1. Lease payments include a fixed payment of $10,000 per year. 2. Lease payments include a fixed payment of $10,000 per year, plus $500 for insurance and $600 for a maintenance contract. 3. Lease payments will be $10,000 in the first year and will increase by 3% (calculated on the previous year's payment) for each of the following 4 years. 4. Lease payments will be $10,000 in the first year and will increase each of the following years by the increase in the CPI from the preceding year. The current CPI is 120 and is expected to increase to 122 at the end of the next year. 5. Lease payments will be $10,000 in the first year and will increase each of the following years by (a) the increase in the CPI from the preceding year, or (b) 3%, whichever is greater. The current CPI is 120…A contract requires lease payments of $800 at the beginning of every month for 8 years. a. What is the present value of the contract if the lease rate is 5.22% compounded annually? b. What is the present value of the contract if the lease rate is 5.22% compounded daily?Each of the four independent situations below describes a sales-type lease in which annual lease payments a at the beginning of each year. Each is a finance lease for the lessee. (FV of $1, PV of $1, FVA of $1, PVA of $1, $1) (Use appropriate factor(s) from the tables provided.) Situation 1 2 3 Lease term (years) 7 7 8 Lessor's and lessee's interest rate Residual value: 8 128 98 11% 10% Estimated fair value 0 $50,000 $8,000 $50,000 Guaranteed by lessee 0 0 $8,000 $60,000 Determine the following amounts at the beginning of the lease. (Round your intermediate and final answers dollar amount.) Situation 2 A The lessor's: 1. Lease payments 2. Gross investment in the lease 3. Net investment in the lease The lessee's: 4. Lease payments 5. Right-of-use asset 6. Lease payable B
