Solve the MCQ When should a company recognize amortization of leaseholdimprovements?a) Over the original lease term onlyb) Over the shorter of useful life or remaining lease termincluding renewal optionstermOver the useful life of the improvements regardless of leased) When improvements are first made

Explanation of Leasehold Improvements: Leasehold improvements are permanent modifications,…

Answered: When should a company recognize…

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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For a lease that transfers ownership of the property to the lessee by the end of the lease term, the lessee should: a.amortize the right-of-use asset over the economic life of the asset in a manner consistent with the lessee's normal depreciation policy for owned assets b.amortize the right-of-use asset over the lease term in a manner consistent with the lessee's normal depreciation policy for owned assets c.record each lease payment as lease expense d.combine interest expense and amortization expense and report as a single lease expense
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
In a sale and leaseback transaction, what is used by the buyer-lessor to depreciate the cost of the leased asset? Remaining useful life Lease term Excess of useful life over the lease term Total Useful life
What is the proper accounting treatment to record improvements to leased property for a lessee? Group of answer choices Capitalize and depreciate over the lesser of the life of the improvement or lease term. Expense in the year in which expenses are incurred. Expense in the year in which expenses are incurred and increase basis of asset. Capitalize and depreciate over the greater of the life of the improvement or lease term.
A(n) is a contract for the use of an asset for a period of time without having to buy the asset. Oa. indenture Ob. revenue option Oc. lease Od. depreciation hedge
Explain the impact on lease accounting of other payments, including nonleasepayments, initial direct costs, and leasehold improvements
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.
In calculating the amortization of a leased asset, the lessee should subtract a Select one: a. guaranteed residual value and amortize over the term of the lease. b. unguaranteed residual value and amortize over the term of the lease. c. guaranteed residual value and amortize over the life of the asset. d. unguaranteed residual value and amortize over the life of the asset. e. None of the above.
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
1. The right-of-use asset shall be initially recognized at cost, which shall be comprise of the following except: a. initial direct costs incurred by the lessee. b. present value of lease payments not yet paid at commencement. c. lease payments made to the lessor at or after commencement date, less any lease incentive received. d. any estimated costs for dismantling and removing the asset, or restoring the site on which the asset is located or restoring the underlying site on which the asset is required by the terms of the lease, to the extent that the lessee incurs an obligation for those costs. 2. The primary difference between a direct finance lease and a dealer’s lease is the a. recognition of the manufacturer’s or dealer’s profit at the inception of the lease. b. manner in which rental receipts are recorded as rental income. c. amount of depreciation recorded each year by the lessor. d. allocation of initial direct costs by the lessor to periods benefited by the…
The initial direct cost is added to the cost of the asset to get the netinvestment in the lease which shall be spread over the lease term. Question: True or False
How does the existence of leasehold improvements can affect the determination of the lease term?

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When should a company recognize amortization of leasehold improvements? a) Over the original lease term only b) Over the shorter of useful life or remaining lease term including renewal options term Over the useful life of the improvements regardless of lease d) When improvements are first made