Financial Accounting 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 optionsc) Over the useful life of the improvements regardless of leasetermd) When improvements are first made

Physical changes made to a leased property, like adding new walls, flooring, or lighting, are known…

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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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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
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A right-of-use asset in a lease arrangement is ___? (Accounting) a) Depreciated over lease term or useful life b) Only depreciated if purchase option exists c) Never depreciated d) Depreciated over fixed period
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
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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
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.
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.
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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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 c) Over the useful life of the improvements regardless of lease term d) When improvements are first made