9. Baa Co. enters into a lease of commercial space. The contractspecifies a non-cancellable term of five years and a two-year,market-pricedcommencement, Baa Co. makes significant leaseholdimprovements with a useful life of ten years. Baa Co.determines that the economic benefits of the leaseholdrenewal option.Beforetheleaseimprovements can only be realized through continuedof the leased property. At lease commencement,Occupancyb. 5 yearsc. 7 yearsd. 10 yearsa. 2 yearsWhich of the following statements is incorrect regarding theaccounting for lease liabilities?Lease liabilities are subsequently measured at amortizedcost, adjusted for lease modifications and reassessments.b. Subsequent lease payments are apportioned to both theinterest and the principal balance of the lease liability.c Periodic interests reflect a varying rate of interest on theremaining balance of the lease liability.d. Periodic interests reflect a constant rate of interest on theremaining balance of the lease liability.11. A right-of-use asset is initially measured at cost andsubsequently measured using thea. cost modelb. fair value modelc. revaluation modeld. any of these12 Which of the following is incorrect regarding the accountingfor leases by a lessee?a. A lessee recognizes the same total amount of expense on alease whether it uses the general recognition or therecognition exemption under PFRS 16.0. The interest expense on a lease liability decreases eachperiod.C According to PFRS 16, executory costs, such as insuranceand real property taxes, are always excluded from leasepayments regardless of whether these oosts transfer goodsor services to the lessee.d. A lessee shall allocate the total consideration in a contractto the lease components and non-lease components of thecontract. a. The ownership over the leased asset is expected to betransferred to the lessee at the end of the lease term, suchasset's residual value when depreciating its right-of-use asset?as when there is a lease contract contains a purchasec. The lessee's accounting policy is to depreciate assets using13. In which of the following would the lessee deduct the leasedannual lease payments. Part of this payment representsinterest and part represents a reduction in the net leaseliability. The portion of the lease payment in the fifth yearapplicable to the reduction of the net lease liability should be17. A six-year lease expiring on December 31 specifies equalChapter 7336option which the lessee expects to exercise.b. The residual value is guaranteed by the lessee.the straight line method.d. All of these.14. The discount rate used by the lessee in accounting for leases isthea. interest rate implicit in the lease.b. lessee's incremental borrowing rate of interest.c. lease contract stated interest rate.d. Choice (a) if this is determinable, if not then Choice (b).15. Initial direct costs incurred by a lessee area. expensed immediately.b. capitalized as cost of the right-of-use asset.c. included in the initial measurement of lease liability.d. b and c16. When a lease transfers ownership to the lessee by the end ofthe lease term, the underlying asset is depreciateda. over its useful life.b. over the lease term.c. over the shorter of a and b.d. not depreciated17. A six-year lease expiring on December 31 specifies equaa. Less than in the fourth yearb. Less than in the sixth yearc. The same as in sixth yeard. Less than in the fourth year

Since, the multiple independent questions are posted, only the first one will be answered.

Baa Co. enters into a lease of commercial space. The C8ntract specifies a non-cancellable term of five years and a two-year, market-priced commencement, Baa Co. makes significant leasehold improvements with a useful life of ten years. Baa Co. determines that the economic benefits of the leasehold improvements can only be realized through continued renewal option. Before the lease

Baa Co. enters into a lease of commercial space. The C8ntract specifies a non-cancellable term of five years and a two-year, market-priced commencement, Baa Co. makes significant leasehold improvements with a useful life of ten years. Baa Co. determines that the economic benefits of the leasehold improvements can only be realized through continued renewal option. Before the lease

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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