Exam 18: Extension: Ol Accounting for Leases Current Standard

The lease multiplier developed by credit rating agencies to estimate the capitalized value of long-term operating leases is calculated as 1 divided by the discount rate.

For the lessee, an unguaranteed residual value is the same as no residual value in terms of computing the minimum lease payments.

When using the multiplier approach to lease capitalization, which of the following is not a factor that must be estimated?

A direct-finance lease is classified in the lessor's balance sheet as ________.

On January 1, Teague Company leased office equipment from Sprague Corporation. The lease qualifies as an operating lease. The term is three years and calls for semiannual payments of $25,000 each, payable on June 30 and December 31 of each year. Sprague acquired the machines at a cost of $150,000 on January 1 of the current year. The expected life is five years with no residual value expected. What journal entry should Montgomery make on January 1 of the current year?

In a sales-type capital lease, the present value of the unguaranteed residual value is included in both the sales revenue and cost of goods sold.

Compare and contrast the differences between accounting for leases under GAAP and IFRS.

To be classified as a capital lease, a lease must meet all four of the capital lease criteria.

A lease is classified as a capital lease if the present value of the minimum lease payments is at least 75% of the fair market value of the property at the inception of the lease.

Which of the following is not an advantage of leasing an asset for the lessee?

When there is a guaranteed residual value, the leased asset will be depreciated over the life of the asset instead of the life of the lease.

When using the discounted cash flow approach to lease capitalization, how is the off-balance sheet lease obligation estimated?

On January 1 of the current year, Stephens Corporation leased machinery from Montgomery Company. The machine originally cost Montgomery $277,000. The lease agreement is an operating lease, the terms of which call for five annual payments of $34,000. The first payment is due at the inception of the lease; the other four payments are due on January 1 of subsequent years. What journal entry should Stephens make on January 1 of the current year?

On February 1 of the current year, Greenstein Corporation leased equipment under a six-year noncancellable lease. The estimated economic of the equipment is ten years. The fair value of the equipment is $1,100,000. The lease does not contain a bargain purchase option or a transfer of title. Greenstein must classify this lease as a capital lease if the present value of the minimum lease payments is at least ________.

For a lessor to classify a lease as a capital lease, ________.

StatMed Corporation leases medical equipment under a five-year capital lease. The terms of the lease call for five equal payments of $25,000, with the first payment due at the inception. The interest rate implicit in the lease is 8%. The first year's interest expense will be ________. (Do not round interim calculations and round your final answer to the nearest whole dollar.)

Under a sales-type capital lease, a dealer's profit is measured as the difference between the property's fair value and its carrying value.

What disclosures must a lessee include on its financial statements for all leases to which it has entered?

Which of the following is not a component of a minimum lease payment?

Under U.S. GAAP, the disclosure requirements for lessors with operating leases include the cost or carrying value of assets held and leased to others, net of depreciation.