Revenue for a sales−type lease is the lower of A. the fair value of the leased...
Revenue for a sales−type lease is the lower of
A.
the fair value of the leased asset or the sum of the lease receivable and any lease payments paid before the lease commencement date
B.
the present value of the leased asset or the sum of the lease payable and any lease payments paid before the lease commencement date
C.
the fair value of the leased asset or the sum of the lease receivable and lease payments paid after the lease commencement date
D.
the present value of the leased asset or the sum of the lease payable and any lease payments paid after the lease commencement date
Homework Answers
Revenue for sale type lease is lower of fair value of lease asset or the sum of lease receivable and any lease payments paid before the lease commencement date.
So the answer is Option A.
Add Answer to:
Revenue for a sales−type lease is the lower of
A.
the fair value of the leased...
One of the criteria for a lease to be classified as a sales-type lease by the...
One of the criteria for a lease to be classified as a sales-type lease by the lessor is that the present value of the sum of (1) the lease payments and (2) any residual value guaranteed by the lessee equals or exceeds substantially all of the fair value of the leased asset. Substantially all of the fair value of the leased asset generally is considered to be O 90% 25% 60% 75%
Day Company leased a machine to Twilight Corporation on 1/1/21. The lease qualifies as a sales-type lease. Day paid $23...
Day Company leased a machine to Twilight Corporation on 1/1/21. The lease qualifies as a sales-type lease. Day paid $230,000 for the machine and is leasing it to Twilight for $38,000 per year, an amount that will return 10% to Day. The present value of the lease payments is $230,000. The lease payments are due each January 1, beginning in 2021. What is the appropriate interest entry on December 31, 2021? 0:53:03 Multiple Choice 0 23,000 Interest receivable Interest revenue...
Taylor Company leased an asset from Lease Corp. using an operating lease for equipment with a...
Taylor Company leased an asset from Lease Corp. using an operating lease for equipment with a useful life of seven years. The initial lease term was for three years. After two years, Taylor Company and Lease Corp. agree to extend the lease term by four years, and to change the amount of lease payments. The additional four years were not originally an option. The increase in present value of lease payments for Taylor is $200,000. The present value of the...
Taylor Company leased an asset from Lease Corp. using an operating lease for equipment with a...
Taylor Company leased an asset from Lease Corp. using an operating lease for equipment with a useful life of seven years. The initial lease term was for three years. After two years, Taylor Company and Lease Corp. agree to extend the lease term by four years, and to change the amount of lease payments. The additional four years were not originally an option. The increase in present value of lease payments for Taylor is $200,000. The present value of the...
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No C. D. No No Yes [51 On January 1, Year 1, Lessee entered into a 4-year lease and did not incur...
No C. D. No No Yes [51 On January 1, Year 1, Lessee entered into a 4-year lease and did not incur initial direct costs. At the lease commencement date, Lessee A. Must discount the lease payments using the lessor's incremental borrowing rate. B. Recognizes the same amount for the right-of-use asset and the lease liability under a finance lease and an operating lease. C. Applies different accounting for initial measurement of a right-of-use asset under finance and operating leases....
Franklin Co. leased its manufactured equipment to Parker Inc. for a 4-year term. Franklin Co. reported...
Franklin Co. leased its manufactured equipment to Parker Inc. for a 4-year term. Franklin Co. reported a book value of $65,000 for the equipment in its inventory account. The lease commenced on January 1, 2020, with the first annual payment of $20,000 due immediately. The equipment has a useful life of 4 years, an estimated fair value of $72,486, and no residual or salvage value. The implicit rate of the lease is 7% and collectability of the lease payments from...
Which of the following is not a sufficient criterion for a lessor to classify a lease...
Which of the following is not a sufficient criterion for a lessor to classify a lease as a sales-type lease? Multiple Choice The lease transfers Ownership of the leased asset to the lessee at the end of the lease term. O The lessee has the option of acquiring the asset during or at the end of the lease term at a bargain price. O The present value of the lease payments is greater than the carrying value of the leased...
The following facts pertain to a noncancelable lease between JK Co. and Lessor Inc 1/1/2010 Inception...
This is a sales-type lease to lessor because: The present value of the minimum lease payments is bigger than 90% of the fair value of the leased property The collectibility of the payments is reasonably predictable and lessor's performance is complete. The fair value of the leased asset is bigger than the book value of the leased asset on lessor's book. All of the above.
Fox Financing, Inc. leased a drilling machine to lease to Guy Company. The noncancelable lease requires...
Fox Financing, Inc. leased a drilling machine to lease to Guy Company. The noncancelable lease requires lease payments of $5,000 per year, payable in advance, over a four-year period. There is a bargain purchase option of $10,000 for Guy. Fox's implicit interest rate (known to Guy) is 10 percent. The lease term begins on January 1,2019. The machine's economic life is 10 years. The machine's book value is $22,000 and fair value $25,000. The collectability of the lease payments is...
One of the criteria for a lease to be classified as a sales-type lease by the lessor is that the present value of the sum of (1) the lease payments and (2) any residual value guaranteed by the lessee equals or exceeds substantially all of the fair value of the leased asset. Substantially all of the fair value of the leased asset generally is considered to be O 90% 25% 60% 75%
Day Company leased a machine to Twilight Corporation on 1/1/21. The lease qualifies as a sales-type lease. Day paid $230,000 for the machine and is leasing it to Twilight for $38,000 per year, an amount that will return 10% to Day. The present value of the lease payments is $230,000. The lease payments are due each January 1, beginning in 2021. What is the appropriate interest entry on December 31, 2021? 0:53:03 Multiple Choice 0 23,000 Interest receivable Interest revenue...
No C. D. No No Yes [51 On January 1, Year 1, Lessee entered into a 4-year lease and did not incur initial direct costs. At the lease commencement date, Lessee A. Must discount the lease payments using the lessor's incremental borrowing rate. B. Recognizes the same amount for the right-of-use asset and the lease liability under a finance lease and an operating lease. C. Applies different accounting for initial measurement of a right-of-use asset under finance and operating leases....
Franklin Co. leased its manufactured equipment to Parker Inc. for a 4-year term. Franklin Co. reported a book value of $65,000 for the equipment in its inventory account. The lease commenced on January 1, 2020, with the first annual payment of $20,000 due immediately. The equipment has a useful life of 4 years, an estimated fair value of $72,486, and no residual or salvage value. The implicit rate of the lease is 7% and collectability of the lease payments from...
Which of the following is not a sufficient criterion for a lessor to classify a lease as a sales-type lease? Multiple Choice The lease transfers Ownership of the leased asset to the lessee at the end of the lease term. O The lessee has the option of acquiring the asset during or at the end of the lease term at a bargain price. O The present value of the lease payments is greater than the carrying value of the leased...
This is a sales-type lease to lessor because: The present value of the minimum lease payments is bigger than 90% of the fair value of the leased property The collectibility of the payments is reasonably predictable and lessor's performance is complete. The fair value of the leased asset is bigger than the book value of the leased asset on lessor's book. All of the above.
Fox Financing, Inc. leased a drilling machine to lease to Guy Company. The noncancelable lease requires lease payments of $5,000 per year, payable in advance, over a four-year period. There is a bargain purchase option of $10,000 for Guy. Fox's implicit interest rate (known to Guy) is 10 percent. The lease term begins on January 1,2019. The machine's economic life is 10 years. The machine's book value is $22,000 and fair value $25,000. The collectability of the lease payments is...
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