Find out Variable lease payments based on an indexare?i) Excluded from lease liabilityii) Included using initial indexiii) Recognized as expense when incurrediv) Added to equity

Concept of Lease Liability:Lease liability refers to the financial obligation a lessee records on…

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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 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
Which of the following is not included in the lease payments for the purpose of computing the lease liability? A. Fixed payments less any lease incentives receivable B. Variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date C. Guaranteed residual value D. Contingent rent based on level of sales
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When a lease qualifies as a finance lease, what amount is initially recorded as the cost of the right-of-use asset? A) The present value of the lease payments B) The sum of the gross (undiscounted) lease payments. O A O B « Previous Next Not saved Submit Quiz
When a lessor receives cash on an operating lease, which of the following accounts is increased? A. Lease Payable B. Interest Revenue: Leases C. Lease Receivable D. Rent Revenue
Each period of a finance lease, the lessee records a lease expense that includes which of the following? Group of answer choices Interest expense on the lease liability, using the effective interest rate method and the discount rate it used to compute the present value of the liability at the lease commencement date; variable lease payments not included in the lease liability in the period in which the obligation for the variable payments is incurred; and changes in variable lease payments that depend on an index or rate. Neither A nor B is correct. Interest expense on the lease liability, using the effective interest rate method and the discount rate it used to compute the present value of the liability at the lease commencement date; variable lease payments not included in the lease liability in the period in which the obligation for the variable payments is incurred. Both A & B are correct.
What is the reason for excluding variable lease payments from the measurement of the lessee’s lease liability and the lessor’s receivable?
Gross investment in the lease is equal to a. Sum of the lease payments receivable by a lessor under a finance lease and any unguaranteed residual value accruing to the lessor b. Present value of the lease payments under a finance lease of the lessor. c. The lease payments under a finance lease of the lessor d. Present value of lease payments under a finance lease of the lessor and any unguaranteed residual value.
opinion: Should lease payments be a current liability included in the acid-test ratio? why
A lease agreement whereby the lessee recognized rent expense which is always equals to the rent income recognized by the lessor at a given period of time. A. Operating lease B. Finance lease C Terminating lease D. Sale type lease

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Variable lease payments based on an index are? i) Excluded from lease liability ii) Included using initial index iii) Recognized as expense when incurred iv) Added to equity