Exam 18: Extension: Ol Accounting for Leases Current Standard

A lessee's option to purchase a leased asset at a price that is substantially lower than the asset's fair value is referred to as a(n) ________.

Jackson Corporation leases equipment to Andrews Company for a five-year period. At the beginning of the lease, Jackson records sales revenue. The lease to Andrews must ________.

What is a requirement for lease disclosures under IFRS?

Which of the following is a true statement regarding treatment of leases under GAAP and IFRS?

Initial direct costs are expensed at the inception of the lease in ________.

In determining the present value of the minimum lease payments under U.S. GAAP, the discount rate used by the lessee is the lower of the lessor's implicit rate or the lessee's incremental borrowing rate.

Which of the following costs are excluded from a minimum lease payment?

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

Superbyte Corporation sells photographic equipment. Superbyte leases equipment to Laguna Madre Company on January 1 of the current year. The cost to manufacture the equipment was $12 million. The lease agreement between SuperByte and Laguna Madre had the follow terms: 1. The lease is noncancellable. 2) The lease has no residual value or bargain purchase option. 3) The lease term is 8 years; payments are made semiannually. 4) Depreciation is recorded each December 31 using the straight-line approach. 5) The economic life of the equipment is 8 years. 6) The lessee's incremental borrowing rate and the implicit interest rate are both 12% annually. 7) The lease payments are $1,493,617 semiannually. The first payment is due at the inception of the lease; subsequent payments are made every July 1 and January 1. 8) The fair value of the equipment at the inception of the lease is $16,000,000. What is the interest revenue that SuperByte will report on this lease in its current year income statement?

At the end of a lease, if the actual residual value exceeds the residual value guaranteed by the lessee, ________.

Which of the following statements are correct regarding an operating lease?

Generally, the lease term is the duration of the non-cancellable portion of the lease plus any bargain renewal options.

If the present value of the minimum lease payments is be greater than or equal to ________, the lessee will record the lease as a capital lease.

A lease is classified as a capital lease if the lease term is at least 75% of the estimated life for the property.

When there is an unguaranteed residual value, the lessor includes the present value of the unguaranteed residual value in the lease receivable.

Discuss the economic advantages and disadvantages of leasing assets.

The cost of a leasehold improvement is depreciated over which of the following time periods?

On January 1 of the current year, Fields Corporation leased a machine from Kilmer Company. The machine originally cost Kilmer $500,000. The lease is an operating lease that requires for five annual payments of $72,000 beginning on January 1 of the current year. Which of the following journal entries should Kilmer record on January 1 of the current year?

When the lessor pays executory costs then shifts the costs to the lessor through higher rental payments, the executory costs are not included in the calculation of minimum rental payments.

Under some circumstances, the lessee does not record the leased asset and lease obligation on the balance sheet.