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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A right-of-use asset in a lease arrangement is ? (Accounting) a) Never depreciated b) Only depreciated if purchase option exists c) Depreciated over lease term or useful life d) Depreciated over fixed period
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
9. Baa Co. enters into a lease of commercial space. The contract specifies a non-cancellable term of five years and a two-year, market-priced commencement, Baa Co. makes significant leasehold improvements with a useful life of ten years. Baa Co. determines that the economic benefits of the leasehold renewal option. Before the lease improvements can only be realized through continued of the leased property. At lease commencement, Occupancy b. 5 years c. 7 years d. 10 years a. 2 years Which of the following statements is incorrect regarding the accounting for lease liabilities? Lease liabilities are subsequently measured at amortized cost, adjusted for lease modifications and reassessments. b. Subsequent lease payments are apportioned to both the interest and the principal balance of the lease liability. c Periodic interests reflect a varying rate of interest on the remaining balance of the lease liability. d. Periodic interests reflect a constant rate of interest on the remaining…
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
Assuming that this is classified as an operating lease, create an amortization table for the right-of-use asset. Amortization of Right-of-Use Asset Lease Expense Amortizatio n of Right- Interest of-Use Asset 12/31/2019 12/31/2020 N 12/31/2021 23 12/31/2022 12/31/2023 Total Answer: Amortization of Right-of-Use Asset Lease Expense Amortizatio n of Right- Interest of-Use Asset 12/31/2019 12,400 2,371 10,029 12/31/2020 12,400 1,837 10,563 12/31/2021 12,400 1,266 11,134 12/31/2022 12,400 654 11,746 12/31/2023 12,400 0 12,400 Total 62,000 6,128 55,872 Diff: 2 Var: 1 Objective: 18.4 IFRS/GAAP: GAAP AACSB: Application of knowledge 22) Prepare the journal entry required on December 31, 2019. Assume this is an operating lease. Answer:
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.
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

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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