Operating leases are examples of off‑the‑balance‑sheet financing.​   True or False?

Why should investors prefer that all significant leases be reportedon the balance sheet?

Finance leases are agreements that are formulated as leases, but are installment purchases, i.e., sales-like, in its economic substance. O True O False

Leasing is often referred to as off-balance-sheet financing because of the way that the transaction is treated and reported in financial statements. According to the FASB-issued Statement 13, which of the following statements is true? The present value of all future lease payments should be reported as assets on the balance sheet. Leased assets should be reported as current assets on the balance sheet. The present value of all past lease payments should be reported as a liability on the balance sheet. Assets leased under financial or capital leases should be reported as fixed assets on the balance sheet. Consider the following statement on capital leases: According to Statement 13, the payments on a financial lease should be treated as an operating expense and should not in any case. affect a firm's true debt ratio. Is the preceding statement is true or false. True False

Which of the following statements is characteristic of leases?   a.If a lease is classified as an operating lease, the lessee records an asset on its statement of financial position. b.Lease agreements are not a popular form of financing the purchase of assets because leases require a large initial outlay of cash. c.If a lessor classifies a lease as a finance lease, the lessor records a lease liability on its statement of earnings. d.Accounting recognizes two types of leases—operating and finance.

Which of the following is not one of the classifications for leases from the lessor’s viewpoint? Operating. Sales-type. Direct financing. Off-balance sheet.

Which of the following statements is most CORRECT? Oa. A key difference between a capital lease and an operating lease is that with a capital lease, the lease payments provide the lessor with a return of the funds invested in the asset plus a return on the invested funds, whereas with an operating lease the lessor depends on the residual value to realize a full return of and on the investment. Ob. Finance leases usually have a cancelation feature. Oc. Capital, or financial, leases generally provide for maintenance by the lessor. Od. Capitalizing a lease means that the firm issues equity capital in proportion to its current capital structure, in an amount sufficient to support the lease payment obligation. Oe. The fixed charges associated with a lease can be as high as, but never greater than, the fixed payments associated with a loan.

Why is it appropriate to compare the cost of lease financing with that of debtfinancing?

17. Which of the following statements regarding leases is false? a.Accounting recognizes two types of leases—operating and finance leases. b.Lease agreements are a popular form of financing the purchase of assets because leases do not require a large initial outlay of cash. c.If a lease is classified as an operating lease, the lessee records a lease liability on its statement of financial position. d.If a lease is classified as a finance lease, the lessee records a lease liability on its statement of financial position.

IFRS distinguishes between sales-type and direct financing leases for lessors. True or False