Lease Lease is a contractual agreement whereby the right to use an asset for a particular period of time is provided by the owner of the asset to the user of the asset. The owner, who possesses the asset, is termed as ‘Lessor’ and user, to whom the right is transferred to, is termed as ‘Lessee’. To state: the classification of lease that management would prefer to avoid income smoothing over time in income statement.

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Answer 1

Question

Chapter 15, Problem 15.7BYP

(1)

To determine

Lease

Lease is a contractual agreement whereby the right to use an asset for a particular period of time is provided by the owner of the asset to the user of the asset. The owner, who possesses the asset, is termed as ‘Lessor’ and user, to whom the right is transferred to, is termed as ‘Lessee’.

To state: the classification of lease that management would prefer to avoid income smoothing over time in income statement.

(2)

To determine

To Explain: if objective reporting is more or less difficult under IFRS.

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Part 1: New Lease Accounting –IFRS 16 Leases Effect Analysis. Identify differences between IFRS 16 and U.S. GAAP new lease accounting (ASC Topic 842). Based on these differences, discuss which one (IFRS or U.S. GAAP) you favor and why? Discuss three main features of the two transition methods for lessees under ASC 842 and IFRS 16. Which transition method would investors likely prefer? Why? Which transition method may be preferred by companies? Why?

Part 1: New Lease Accounting – IFRS 16 Leases Effect Analysis. What are the top three industries most affected by IFRS 16 as measured by the present value of future payments for off-balance-sheet leases to total assets? Which leased assets propel them to the top three? Also, discuss the extent that smaller firms would be affected by IFRS 16. Which payments are to be included in the measurement of lease assets and lease liabilities? Also, discuss the pros and cons of excluding the following payments from the measurement. Variable lease payments linked to future use or sales Optional payments relating to lease-extension option when a lessee is not reasonably certain to exercise the option. Discuss the effects of the new accounting on the following items and ratios of lessees. Provide reason(s) behind all effects. EBITDA, operating profit, and profit before tax Operating cash flow, financing cash flow, and total cash flow Debt to equity, current ratio, and return on total assets

Question 9 of 20 View Policies Current Attempt in Progress When lessors account for residual values related to leased assets, they - / 1 O include the unguaranteed residual value in sales revenue. O reduce the residual value by the executory costs. O recognize more gross profit on a sales-type lease with a guaranteed residual value than on a sales-type lease with an unguaranteed residual value. O include the residual value in the receivable measurement because it is assumed the residual value will be realized. !!!

Answer 2

Question

Chapter 15, Problem 15.7BYP

(1)

To determine

Lease

Lease is a contractual agreement whereby the right to use an asset for a particular period of time is provided by the owner of the asset to the user of the asset. The owner, who possesses the asset, is termed as ‘Lessor’ and user, to whom the right is transferred to, is termed as ‘Lessee’.

To state: the classification of lease that management would prefer to avoid income smoothing over time in income statement.

(2)

To determine

To Explain: if objective reporting is more or less difficult under IFRS.

Expert Solution & Answer

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Answer 3

Question

Chapter 15, Problem 15.7BYP

(1)

To determine

Lease

Lease is a contractual agreement whereby the right to use an asset for a particular period of time is provided by the owner of the asset to the user of the asset. The owner, who possesses the asset, is termed as ‘Lessor’ and user, to whom the right is transferred to, is termed as ‘Lessee’.

To state: the classification of lease that management would prefer to avoid income smoothing over time in income statement.

(2)

To determine

To Explain: if objective reporting is more or less difficult under IFRS.

Expert Solution & Answer

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Answer 4

Question

Chapter 15, Problem 15.7BYP

(1)

To determine

Lease

Lease is a contractual agreement whereby the right to use an asset for a particular period of time is provided by the owner of the asset to the user of the asset. The owner, who possesses the asset, is termed as ‘Lessor’ and user, to whom the right is transferred to, is termed as ‘Lessee’.

To state: the classification of lease that management would prefer to avoid income smoothing over time in income statement.

(2)

To determine

To Explain: if objective reporting is more or less difficult under IFRS.

Expert Solution & Answer

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Answer 5

Chapter 15, Problem 15.7BYP

(1)

To determine

Lease

Lease is a contractual agreement whereby the right to use an asset for a particular period of time is provided by the owner of the asset to the user of the asset. The owner, who possesses the asset, is termed as ‘Lessor’ and user, to whom the right is transferred to, is termed as ‘Lessee’.

To state: the classification of lease that management would prefer to avoid income smoothing over time in income statement.

(2)

To determine

To Explain: if objective reporting is more or less difficult under IFRS.

Answer 6

Chapter 15, Problem 15.7BYP

(1)

To determine

Lease

Lease is a contractual agreement whereby the right to use an asset for a particular period of time is provided by the owner of the asset to the user of the asset. The owner, who possesses the asset, is termed as ‘Lessor’ and user, to whom the right is transferred to, is termed as ‘Lessee’.

To state: the classification of lease that management would prefer to avoid income smoothing over time in income statement.

Answer 7

Chapter 15, Problem 15.7BYP

(1)

To determine

Lease

Lease is a contractual agreement whereby the right to use an asset for a particular period of time is provided by the owner of the asset to the user of the asset. The owner, who possesses the asset, is termed as ‘Lessor’ and user, to whom the right is transferred to, is termed as ‘Lessee’.

To state: the classification of lease that management would prefer to avoid income smoothing over time in income statement.

Answer 8

(2)

To determine

To Explain: if objective reporting is more or less difficult under IFRS.

Answer 9

(2)

To determine

To Explain: if objective reporting is more or less difficult under IFRS.

Answer 10

Expert Solution & Answer

Answer 11

Expert Solution & Answer

Answer 12

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Answer 13

Ch. 15 - Prob. 15.1Q Ch. 15 - Prob. 15.2Q Ch. 15 - Prob. 15.3Q Ch. 15 - A lessee should classify a lease transaction as a...Ch. 15 - Lukawitz Industries leased non-specialized...Ch. 15 - In accounting for a finance lease/sales-type...Ch. 15 - What is selling profit on a sales-type lease? How...Ch. 15 - At the beginning of an operating lease, the lessee...Ch. 15 - At the beginning of an operating lease, the lessor...Ch. 15 - In accounting for an operating lease, how are the...

Solution Summary: The author explains that SD Incorporation would prefer to avoid income smoothing over time in income statement.

To Explain: if objective reporting is more or less difficult under IFRS.

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Chapter 15 Solutions