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.
Homework Answers
Answer
A.Operating and Capital lease methods.
Operating lease method is the contract where the asset is leased for a particular period lesser than the economic life of asset wheres as in Capital lease methods all the rights relating to the asset has been transferred to lessee.
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The methods of accounting for a lease by the lessee are:
A. Operating and capital lease...
When a lessee is accounting for a capital (finance) lease a) a guaranteed residual value is...
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...
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...
A lessee reported a ten-year capital lease requiring equal annual payments. The reduction of the lease liability in yea...
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...
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....
Journalize the transactions in the books of lessor and lessee if the lease meets the criteria...
Journalize the transactions in the books of lessor and lessee if the lease meets the criteria for recognition as an operating lease instead of a finance lease.
Under U.S. GAAP, which of the following items would require a lessee to classify a lease of equipment as a capital lease...
Under U.S. GAAP, which of the following items would require a lessee to classify a lease of equipment as a capital lease? a. The lease term is 90% of the estimated economic life of the lease property. b. The lease does not contain a bargain purchase option. c. The present value of the contractual minimum lease payments is 75% of the fair value of the leased property. d. There is no transfer of ownership to the lessee at the end...
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...
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...
In a lessee and lessor relationship can one have a finance lease while the other has...
In a lessee and lessor relationship can one have a finance lease while the other has a operating lease or do they both have to have the same type of lease?
1. J Corp. is a lessee that entered into an operating lease in February of Year 1. The company's statement of cash flows...
1. J Corp. is a lessee that entered into an operating lease in February of Year 1. The company's statement of cash flows for the year ending December 31, Year 1 will report: a. A cash outflow from operating activities b. A cash outflow from investing activities c. A cash outflow from financing activities d. No cash outflow 2. Bishop Company is the lessee in an operating lease. Bishop will report straight-line lease expense if it uses: a. IFRS b....
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...
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