Lease 1 does not contain a bargain purchase option, but the lease term is equal to 90 percent of the estimated economic life of the leased property. Lease 2 does not transfer ownership of the property to the lessee by the end of the lease term, but the lease term is equal to 75 percent of the estimated economic life of the leased property. How should the lessee classify these leases? Lease 1 1. Operating lease 2. Operating lease 3. Finance lease 4. Finance lease. 03 02 01 4 Lease 2 Finance lease Operating lease Finance lease Operating lease

Lease 1 does not contain a bargain purchase option, but the lease term is equal to 90 percent of the estimated economic life of the leased property. Lease 2 does not transfer ownership of the property to the lessee by the end of the lease term, but the lease term is equal to 75 percent of the estimated economic life of the leased property. How should the lessee classify these leases? Lease 1 1. Operating lease 2. Operating lease 3. Finance lease 4. Finance lease. 03 02 01 4 Lease 2 Finance lease Operating lease Finance lease Operating 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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E1.
For which of the following conditions will the lessor classify a lease as a sales-type lease? a.The leased asset may be exchanged for a similar asset during the lease term. b.The present value of the sum of the lease payments is equal to or more than the fair value of the underlying asset. c.The lease term is less than one year. d.The lease term is half of the underlying asset’s economic life.
Among the four types of leases: Lessor’s sales-type lease, Lessor’s operating lease Lessee’s finance lease, Lessee’s operating lease Which type(s) of lease will record Lease Liability upon the inception of the lease? Enter the number that represents the correct answer. Lessee’s finance lease, Lessee’s operating lease, and Lessor’s sales-type lease Lessee’s finance lease and Lessee’s operating lease Lessee’s finance lease only Lessee’s operating lease only
Lease A does not contain a bargain purchase option, but the lease term is equal to 90 percent of the estimated economic life of the leased property. Lease B does not transfer ownership of the property to the lessee by the end of the lease term, but the lease term is equal to 75 percent of the estimated economic life of the leased property. How should the lessee classify these leases under U.S. GAAP? Lease A Lease B A.) Operating lease Capital lease B.) Operating lease Operating lease C.) Capital lease Capital lease D.) Capital lease Operating lease
The five criteria of lease classification in US GAAP do not include: A) The agreement specifies that ownership transfers at the end of the lease term. B) The present value of the lease payments exceeds half of the fair value of the asset C) The agreement grants the lessee an option to purchase the underlying asset that the lessee is reasonably certain to exercise. D) The lease term is for the major part of the remaining economic life of the underlying asset. O A O B O D
Part 1: New Lease Accounting – using IFRS 16 Leases Effect Analysis. Which payments are to be included in the measurement of lease assets and lease liabilities? Also, discuss the pros and cons of excluding the following payments from the measurement. - Variable lease payments linked to future use or sales - Optional payments relating to lease-extension option when a lessee is not reasonably certain to exercise the option.
For accounting purposes, which one of the following conditions would automatically cause a lease to be classified as a capital lease? Multiple Choice O O O The lessee can purchase the asset at fair market value at the end of the lease. The lease transfers ownership of the asset to the lessee by the end of the lease term. The lease term equals 60 percent or more of the asset's estimated economic life. The present value of the lease payments equals 75 percent of the asset's fair market value at lease inception. The lessor can renew the lease at the end of the lease term.