From the lessee’s perspective, in the earlier years of a lease,
Group of answer choices
A. finance leases will enable the lessee to report higher income, compared to operating leases. (Incorrect)
B. finance leases will cause debt to increase, compared to operating leases. (Incorrect)
C. operating leases will cause debt to increase, compared to finance leases.
D. operating leases will cause income to increase, compared to finance leases.
Which one is the correct answer?
From the lessee’s perspective, in the earlier years of a lease,
D. operating leases will cause income to increase, compared to finance leases.
In an operating lease, you have to pay lease rental to the lessor, which is not the case with a finance lease. As in finance lease debt increases as the lessee leases the machine for the long term and pays the amount upfront.
From the lessee’s perspective, in the earlier years of a lease, Group of answer choices A....
A lessee reported a ten-year capital lease requiring equal annual payments. The reduction of the lease liability in year 2 should equal a) the current liability shown for the lease at the end of year 1. b) the current liability shown for the lease at the end of year 2. c) the reduction of the lease obligation in year 1. d) one-tenth of the original lease liability. Which statement is correct in comparing capital leases to operating leases? a) A...
When a lessee is accounting for a capital (finance) lease a) a guaranteed residual value is excluded from the “minimum lease payments.” b) an unguaranteed residual value is excluded from the “minimum lease payments.” c) a guaranteed residual value is basically an additional lease payment due at the end of the lease. d) the present value of any guaranteed residual is deducted from the leased asset cost in determining the depreciable amount. In calculating depreciation of a leased asset, the...
Which of the following is a characteristic specific to an operating lease? Group of answer choices A.) The only asset reported in connection with the lease is the leased equipment. B.)The amount of lease liability is calculated at the present value of the future cash flows. C.)The only liability to be reported is the amount of rent expense that is currently due. D.) The leased asset is depreciated by the lessee over its useful life. E.) The interest expense is...
From Bentley’s perspective, provide the journal entries for the following: At lease inception on January 1, Year 1 When the first lease payment is made on June 30, Year 1 When the second lease payment is made on December 31, Year 1 Determine the interest paid over the life of the lease. From Acwen’s perspective, provide the journal entries for the following: At lease inception on January 1, Year 1 When the first lease payment is made on June 30,...
P20.18 Lanier Dairy Ltd. leases its milk cooling equipment from Green Finance Corporation. Both companies use IFRS 16. The lease has the following terms.The lease is dated May 30, 2020, with a lease term of eight years. It is non-cancellable and requires equal rental payments of $30,000 due each May 30, beginning in 2020.The equipment has a fair value and cost at the inception of the lease of $211,902, an estimated economic life of 10 years, and a residual value (which...
(2)The cost of debt of a company will least likely: Group of answer choices increase if the bond is callable. increase if the bond is putable. include both the cost of operating and capital leases.
The main criticism of the institutional perspective is that Group of answer choices it assumes that people will make and keep collective agreements without official enforcement. None of the above. it assumes that the collective owners of the commons are relatively equal in power. it assumes that people do not always act in their immediate self-interest. According to "The End of the Line," human fishing practices are the main cause of the depleted stocks of fish in the oceans of...
2. Which of the following lease contract would be the most likely be classified as a finance lease by the lessee? a. The lease term is 7 years and economic life of the lease asset is 8 years b. The fair value of the lease asset is $20 million, and the present value of the lease payments is $13 million c. Ownership of the leased assets reverts to the lessor at the end of the lease term d. The lessee...
Executory costs include a) maintenance, interest and property taxes. b) interest, property taxes and depreciation. c) insurance, maintenance and property taxes. d) maintenance, insurance and income taxes. Which of the following is a correct statement regarding one of the ASPE capitalization criteria? a) The lease transfers ownership of the property to the lessor. b) The lease must contain a bargain purchase option. c) The lease term is 75% or more of the leased property’s estimated economic life. d) The fair...
P20.9 The following facts pertain to a non-cancellable lease agreement between Woodhouse Leasing Corporation and McKee Electronics Ltd., a lessee, for a computer system: Inception date October 1, 2020 Lease term 6 years Economic life of leased equipment 6 years Fair value of asset at October 1, 2020 $150,690 Residual value at end of lease term –0– Lessor’s implicit rate 8.5% Lessee’s incremental borrowing rate 8.5% Annual lease payment due at the beginning of each year, beginning October 1, 2020...