Which factor determines bargain purchase option classification in equipment lease? Financial Accounting MCQ: Which factorbargain purchasedeterminesclassification in equipment leases?a) Lessor's cost of equipmentb) Fair value at end of leasec) Present value of lease paymentsoptiond) Exercise price relative to expected value

Explanation of Bargain Purchase Option:A bargain purchase option refers to a provision in a lease…

Answered: Financial Accounting MCQ: Which factor…

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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Which of the following cash flows is classified as an investing cash flow? A. interest portion of payment received under a direct financing lease B. reduction of a direct financing lease receivable C. purchase of an asset leased under a sales-type lease D. payment received under an operating lease
Which of the following is most likely a lessee’s disclosure about operating leases?A . Lease liabilities.B . Future obligations by maturity.C . Net carrying amounts of leased assets.
A(n) is a contract for the use of an asset for a period of time without having to buy the asset. Oa. indenture Ob. revenue option Oc. lease Od. depreciation hedge
1. In a sale and leaseback transaction, what is used by the buyer-lessor to depreciate the cost of the leased asset? A. Lease term B. Total Useful life C. Excess of useful life over the lease term D. Remaining useful life 2. Which of the following scenarios regarding a sale and leaseback transaction would result to a loss to the seller-lessee? A. Fair Value < Carrying Amount B. Sale Price < Fair Value C.Sale Price > Fair Value D.Fair Value > Carrying Amount 3. When does a buyer-lessor recognize a financial asset from a sale and leaseback transaction? A. Sale Price > Fair Value B. Fair Value < Carrying Amount C. Sale Price < Fair Value D. Fair Value > Carrying Amount
Question A capital lease is treated as a) Operating expense b) Short-term liability c) Purchase of an asset d) Revenue
MCQ TYPE QUESTION
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For a(n) ________ lease, a lessor recognizes revenue on the sale and records the asset, ________ lease. It also removes the leased asset from its accounts and records the ________. Group of answer choices sales-type; net investment in lease–sales-type; cost of goods sold finance; gross investment in lease–sales-type; cost of goods sold operating; net investment in lease–sales-type; cost of goods sold sales-type; finance; revenue
The buyer-lessor recognizes the asset from a sale and leaseback transaction resulting to a finance lease at? carrying amount sale price the lower of the sale price and fair value fair value
Which of the following is a required financial statement presentation by a lessee for both capital leases and operating lease? A. Amortization Expense and Interest Expense B. Lease Expense C. Right-of-Use Asset and Lease Liability D. The reduction of the Lease Liability as a financing activity
The difference of gross investment in the lease and net investment in the lease of the lessor is? A. Total amount of interest that the lessee shall recognized as interest expense over the lease term. B. Interest income at inception of the lease. C. Total amount of interest that the lessor shall recognized as interest income over the lease term. D. Initial direct cost.

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Financial Accounting MCQ: Which factor bargain purchase determines classification in equipment leases? a) Lessor's cost of equipment b) Fair value at end of lease c) Present value of lease payments option d) Exercise price relative to expected value