5) Operating leases:Multiple ChoiceMay be cancellable by the lessor but only with 6 months' notice.Are never cancellable.May be cancellable but only at the option of the lessor.May be cancellable by the lessee.Are always cancellable at any time with no penalty to the lessee.

Operating lease is lease that permits to use the assets without actually transferring ownership…

Answered: Operating leases: Multiple Choice May…

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter9: Long-term Liabilities

Section: Chapter Questions

Problem 17MCQ: Which of the following statements regarding the new accounting rules, which take effect in 2019, for...

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A lease that has a lease term (including any options to terminate or renew that are reasonably certain) of twelve months or less is considered a “short-term lease.” How does a lessee record a lease using the short-cut approach available as an option for short-term leases?
The details of the equipment lease agreement that Taj Corp. (lessee) recently entered into with Stanger Leasing (lessor) are: Commencement date: January 1, 2019. ■ Term of lease: 12 months. Payments: $1,000 per month first due at the commencement date. Other: Title does not transfer and the lease does not include any renewal or purchase options. Interest rate implicit in the lease: Lessee not able to readily determine. Incremental borrowing rate: 9% per annum (0.75% per month). Estimated useful life of equipment: 8 years. Depreciation method: Straight-line. Year end: December 31. Assume that Taj Corp. does not elect to expense leases of a short-term nature. Prepare the journal entry for January 31, 2019.
The details of the equipment lease agreement that Taj Corp. (lessee) recently entered into with Stanger Leasing (lessor) are: Commencement date: January 1, 2019. Term of lease: 12 months. Payments: $1,000 per month first due at the commencement date. Other: Title does not transfer and the lease does not include any renewal or purchase options. Interest rate implicit in the lease: Lessee not able to readily determine. Incremental borrowing rate: 9% per annum (0.75% per month). Estimated useful life of equipment: 8 years. Depreciation method: Straight-line. Year end: December 31. Assume that Taj Corp. does elect to expense leases of a short-term nature as a practical expedient. Prepare the journal entry for January 1, 2019. Indicate a debit as positive and a credit as negative. Type 0 for any blanks that do not apply.
Long-term financing leases currently: Multiple Choice О show up on the balance sheet. О appear on the company's income statement. do not appear on any financial statements. О appear in the footnotes to the annual report.
given the information below, what type of lease is this for the lessee? Lease term (years) 6 Remaining economic life (years) 10 Present value of lease payment $176,000 Fair value leased asset $200,000 Residual value (unguaranteed) $14,000 Bargain purchase option No Ownership transfer at end of lease. No a. sales-type lease b. short term lease c. operating lease d. finance lease
Which of the following statements is false regarding the accounting for leases? The lessor may not use the straight-line basis for recognizing lease income under an operating lease if another systematic basis is more representative of the pattern in which benefit from the use of the underlying asset is diminished. The amount of lease income recognized each year by the lessor under an operating lease is typically constant even though the contractual payments increase every year by a certain amount specified in the contract. A lessor includes initial direct costs incurred on the operating lease as part of the cost of the leased asset, and initial direct costs are to be recognized in profit or loss on the same basis as rent income is recognized. A lessor includes a rent collected in advance as part of the cost of the leased asset.
under reasonably PROBLEM 1: TRUE OR FALSE in optional the lease. exchange for consideration. L A lease that covers only the 1“ floor of a 10-storey building cannot qualify for accounting under PFRS 16 because the lessee does not have the right to obtain substantially all of the economic benefits of the entire building. 4. Lessees apply a single recognition and measurement approach for all leases, with optional exemptions for short-term leases and leases of low-value assets. borrowing t cost znd et (ie, co opropriate) easuremeri eceived les 5. According to PFRS 16, the lessee includes in the lease payments the price of a purchase option that the lessee is reasonably certain to exercise only if that price is bargain. 6. According to PFRS 16, the lessee includes in the lease payments only the amount that the lessee expects to pay on a residual value guarantee. 7. According to PFRS 16, initial direct costs incurred by a lessee are expensed outright at the lease commencement date. 8. The…
Say True or False
A six-year lease can be renewed for two additional three-year periods, and it also can be terminated after only three years. How do the lessee and lessor decide the lease term to be used in accounting for the lease?
Which of the following statements regarding the new accounting rules, which take effect in 2019, for leases is false? If the lease term is one year or longer, a liability must be recognized. If the lease term is less than one year, an asset must be recognized. The new lease accounting rules will result in more assets and liabilities being recognized on the balance sheet. Leasing will likely remain popular under the new lease accounting rules because leases do not require a large initial outlay of cash.
The following facts pertain to a non-cancelable lease agreement between Faldo Leasing Company and Pharoah Company, a lessee. Commencement date Annual lease payment due at the beginning of each year, beginning with January 1, Residual value of equipment at end of lease term, guaranteed by the lessee Expected residual value of equipment at end of lease term Lease term Economic life of leased equipment Fair value of asset at January 1, Lessor's implicit rate Lessee's incremental borrowing rate January 1, $126,840 $55,000 $50,000 6 years 6 years $653,000 9 % 9 % The asset will revert to the lessor at the end of the lease term. The lessee uses the straight-line amortization for all leased equipment.
Prepare the lease amortization schedule

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Operating leases: Multiple Choice May be cancellable by the lessor but only with 6 months' notice. Are never cancellable. May be cancellable but only at the option of the lessor. May be cancellable by the lessee. Are always cancellable at any time with no penalty to the lessee.