Question

1. Which of the following is an advantage of leasing over the purchase of property
for use by a business?

a. Balance sheet financing.

b. It offers protection against fraud.

c. It can be less costly than other forms of financing.

d. Determining whether the lease is a sales-type lease or a direct financing lease.

2. The FASB’s new accounting standard for leases is

a. ASU 2016-02

b. ASU 2016-03

c. ASU 2016-04

d. ASU 2016-05

3. ASU 2016-02 defines a lease as

a. A useful or valuable thing, person or quality

b. a contract, or part of a contract, that conveys the right to control the use of identified property, plant or equipment for a period of time in exchange for consideration

c. a written or spoken agreement, especially one concerning employment, sales, or tenancy, that is intended to be enforceable by law

d. a company’s legal financial debts or obligations

4. Lessors are only required to recognize lease assets and liabilities for leases with
terms of more than _____ months.

a. 3

b. 6

c. 12

d. 18

5. The new leasing standard will affect a significant number of entities across
industries because:

a. Most companies enter into contracts that are or contain leases to support their business operations.

b. Everyone uses off-balance-sheet financing.

c. Bright line tests no longer exist in U.S. GAAP

d. All companies use leases when recognizing assets

6. The new leasing standard excludes

a. Leases of intangible assets

b. Leases of inventory

c. Both of these

d. Neither of these

7. Each of the following is an implementation challenge faced by entities using the
new leasing standard except:

a. Applying judgment and making estimates

b. Managing the complexities of data collection, storage and maintenance

c. Refining internal controls and other business processes

d. Materiality concerns

Answer 1

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