Question related to Financial Accounting: How doexecutory costs affect capital lease classificationtests?A. Include in minimum lease paymentsB. Add to lease liability onlyC. Capitalize as separate assetD. Exclude from payment calculations

Explanation of Executory Costs:Executory costs refer to expenses associated with a leased asset that…

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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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Question A capital lease is treated as a) Operating expense b) Short-term liability c) Purchase of an asset d) Revenue
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
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Which of the following is not correct statement for accounting by the lessee? The lessee records depreciation expense on the right-of-use asset. O b. The lessee recognizes interest expense on the lease liability over the lease term O c. The lease liability is computed as the present value of the lease payments. O d. The operating lease method is used to account for the lease.
Which of the following statements is true about initial direct costs? A. Initial direct costs of a sales-type lease should be expensed at the commencement of the lease only if no selling profit or loss has been incurred. B. Initial direct costs are ownership-type costs such as insurance, maintenance, and taxes. C. Initial direct costs of an operating lease should be recorded by the lessor as a prepaid asset. D. Initial direct costs should always be debited against income by the lessor in the period of the inception of the lease.
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 methods of accounting for a lease by the lessor are Select one: a. operating and finance lease methods. b. none of these. c. operating and leveraged lease methods. d. operating, sales, and finance lease methods. Clear my choice
The appropriate valuation of an operating lease in the balance sheet of the lessee is? right of use asset present value of lease payments nil gross amount of lease payments
What is lease rent and lease income? Do I have to record initial direct costs when I record payment? Do I need to derecognize the asset?

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Question related to Financial Accounting: How do executory costs affect capital lease classification tests? A. Include in minimum lease payments B. Add to lease liability only C. Capitalize as separate asset D. Exclude from payment calculations