$1: Advance rentals representing option money as well as security deposits to insure faithful performance of certain obligations of the lessee (refundable deposits) are considered part of the lessee's taxable income. S2: Obligations of the lessor to third persons paid or assumed by the lessee in consideration of the lease contract is part of the former's taxable rental income. O S1 is true; S2 is false OS1 is false; S2 is true OS1 is false: S2 is false O S1 is true; $2 is true

$1: Advance rentals representing option money as well as security deposits to insure faithful performance of certain obligations of the lessee (refundable deposits) are considered part of the lessee's taxable income. S2: Obligations of the lessor to third persons paid or assumed by the lessee in consideration of the lease contract is part of the former's taxable rental income. O S1 is true; S2 is false OS1 is false; S2 is true OS1 is false: S2 is false O S1 is true; $2 is true

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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24. One of the following statements is false: * a. If the underlying asset will not revert to the lessor, the residual value is simply ignored by the lessor in the computation of unearned interest income and gross profit on the sale. b. The underlying asset will remain with the lessee if the lease provides for either a purchase option that is reasonably to be exercised or transfer of title to the lessee upon the lease expiration. c. When a lessor actually sells an asset that it has been leasing, the difference between the sales price and the carrying amount of the lease receivable is recognized in profit or loss. d. The gain or loss that pertains to the right retained by the seller- lessee in a sales and leaseback transaction is not recognized.
Which of the following is true about lease incentives?a. It forms part of the lease liability and right of use asset when the amount is actually receivedb. It forms part of the lease liability when the amount is still receivablec. It forms part of the lease liability and right of use asset when the amount is still receivabled. None of the choices
A lease qualifies as a finance (sales-type) lease. Indicate an account to be used by the lessee, and an account to be used by the lessor Select one: Account to be used by the lessee Right of Use Asset Account to be used by the lessor Lease Receivable a. Ob. Account to be used by the lessee Unearned Revenue Account to be used by the lessor Sales Revenue Account to be used by the lessee Lease Expense Account to be used by the lessor Interest Revenue d. Account to be used by the lesseO Lease Liability Account to be used by the lessor Amortization Expense Account to be used by the lessee Amortization Expense Account to be used by the lessor Interest Expense e.
In a sale-leaseback transaction, the lease liability is equals to: A. PV of lease payments accruing to the lessor B. PV of lease payments accruing to the lessor plus any additional financing C. PV of lease payments accruing to the lessor less any prepayments D. PV of lease payments accruing to the lessee
D6) 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.
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An increase in interest income recognized for the period on a lease agreement will have the effect of reducing the unearned revenue account for the lessor. Select one: True False
38. In an operating lease, the lessee records interest expense. lease expense. amortization expense and lease expense. amortization expense.
Which of the following statements is correct related to lease? a. The leased asset is depreciated over the asset's useful life or lease term whichever is higher. b. The leased asset is depreciated over the asset's useful life. c. The leased asset is recorded using the higher amount between fair value of the asset and present value of the minimum lease payments. d. Under IFRS 16 a lease is defined as ‘a contract that conveys the right to use an asset for a period of time in exchange for consideration'.
(48) If, as part of the accounting for a lease, the lessee debits an asset and credits a liability, then the lease must be a(n): A. Finance Lease B. Operating Lease C. Operating lease or finance lease D. none of the above