Can a lessee establish a Right-Of-Use-Asset under an operating lease?
Can a lessee establish a Right-Of-Use-Asset under an operating lease?
Homework Answers
Solution:
Under the new leases standard, lessees will need to recognize all of their leases on the balance sheet by recording a right-of-use asset and a lease liability. Hence lessee can establish a Right-Of-Use-Asset under an operating lease
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Can a lessee establish a Right-Of-Use-Asset under an operating
lease?
Under AASB 16, a lessee: Only eecognises a leased asset on their balance sheet because the...
Under AASB 16, a lessee: Only eecognises a leased asset on their balance sheet because the lessee is the legal owner of the leased asset for the duration of the lease. Must recognise all leases in their balance sheet. Recognises a right-of-use asset and a lease liability in their balance sheet. Only recognises a lease liability at inception of the lease.
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....
Question 1 what is the most important part of lease calculations for both the lessee and...
Question 1 what is the most important part of lease calculations for both the lessee and the lessor? The lessee calculating the right of use asset and the lessor calculating the implicit interest rate. The lessee calculating the lease liability and the lessor calculating the lease payment. The lessee calculating the implicit interest rate and the lessor calculating the right of use asset. The lessee calculating the lease payment and the lessor calculating the lease receivable.
In a finance lease: the lessee records an asset and a liability for the present value...
In a finance lease: the lessee records an asset and a liability for the present value of lease payments. the lessor records an asset and a liability for the present value of lease payments. the lessee records an asset and a liability for the total of the lease payments. the lessor records an asset and a liability for the total of the lease payments. In connection with a lease of more than 12 months, the lessee always will record each...
Journal Entries for a Capital Lease-Lessee On January 1, the lessee company signed an operating l...
Journal Entries for a Capital Lease-Lessee On January 1, the lessee company signed an operating lease contract. The lease contract calls for $3,000 payments at the end of each year for 10 years. The rate implicit in the lease is 10%. Assume that the lease is to be accounted for as a capital lease. Also assume that the leased asset is to be amortized over the 12-year asset life rather than the 10-year lease term. 1. Make the journal entries...
2. (LESSEE ENTRIES FOR AN OPERATING LEASE). Assume that Ace Leasing Company and King Company, a...
2. (LESSEE ENTRIES FOR AN OPERATING LEASE). Assume that Ace Leasing Company and King Company, a lessee, agreed to the lease shown below instead on the one shown in problem 1. Commencement of Lease Date January 1, 2020 Annual lease payment due at the beginning of the year beginning with January 1, 2020 $137,171 Lease term 6 years Economic life of leased equipment 10 years Fair Value of asset at January 1, 2020 $950,000 Lessor's Implicit Rate 12% Lessee's incremental...
The methods of accounting for a lease by the lessee are: A. Operating and capital lease...
The methods of accounting for a lease by the lessee are: A. Operating and capital lease methods. B.Operating sales, and capital lease methods. C. Operating and finance lease methods. D. None of these answers are correct.
The Harris Company is the lessee on a four-year lease with the following payments at the...
The Harris Company is the lessee on a four-year lease with the following payments at the end of each year: Year 1: $ 20,000 Year 2: $ 25,000 Year 3: $ 30,000 Year 4: $ 35,000 An appropriate discount rate is 7 percentage, yielding a present value of $91,718. a-1. If the lease is an operating lease, what will be the initial value of the right-of-use asset? a-2. If the lease is an operating lease, what will be the initial...
The Harris Company is the lessee on a four-year lease with the following payments at the...
The Harris Company is the lessee on a four-year lease with the following payments at the end of each year Year 1: Year 2 Year 3: Year 4: $18,000 $23,000 $28,000 $33,000 An appropriate discount rate is 7 percentage, yielding a present value of $84,943. 1-1. If the lease is an operating lease, what will be the initial value of the right-of-use asset? Initial value of the right-of-use asset a-2. If the lease is an operating lease, what will be...
The Harris Company is the lessee on a four-year lease with the following payments at the...
The Harris Company is the lessee on a four-year lease with the following payments at the end of each year: Year 1: $ 16,500 Year 2: $ 21,500 Year 3: $ 26,500 Year 4: $ 31,500 An appropriate discount rate is 7 percentage, yielding a present value of $79,863. A. If the lease is an operating lease, what will be the initial value of the right-of-use asset? B. If the lease is an operating lease, what will be the initial...
Under AASB 16, a lessee: Only eecognises a leased asset on their balance sheet because the lessee is the legal owner of the leased asset for the duration of the lease. Must recognise all leases in their balance sheet. Recognises a right-of-use asset and a lease liability in their balance sheet. Only recognises a lease liability at inception of the lease.
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....
2. (LESSEE ENTRIES FOR AN OPERATING LEASE). Assume that Ace Leasing Company and King Company, a lessee, agreed to the lease shown below instead on the one shown in problem 1. Commencement of Lease Date January 1, 2020 Annual lease payment due at the beginning of the year beginning with January 1, 2020 $137,171 Lease term 6 years Economic life of leased equipment 10 years Fair Value of asset at January 1, 2020 $950,000 Lessor's Implicit Rate 12% Lessee's incremental...
The Harris Company is the lessee on a four-year lease with the following payments at the end of each year Year 1: Year 2 Year 3: Year 4: $18,000 $23,000 $28,000 $33,000 An appropriate discount rate is 7 percentage, yielding a present value of $84,943. 1-1. If the lease is an operating lease, what will be the initial value of the right-of-use asset? Initial value of the right-of-use asset a-2. If the lease is an operating lease, what will be...
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