Question 1

SFAS No. 13 identifies four capitalization tests that are now applicable to both lessees and lessors.

Accepted Answer

A) True 
 B)False  True

Question 2

Which of the following is a true statement regarding APB Opinion No. 5?

Accepted Answer

A) It took a legalistic approach to determining whether a lease was in substance a purchase. 
B) The stated objective was to clarify ARB 38, not change it. 
C) Cancellability was viewed as mitigating the executory nature of lease contracts. 
D) It greatly increased the number of leases that were capitalized. 
A) It took a legalistic approach to determining whether a lease was in substance a purchase. 
B) The stated objective was to clarify ARB 38, not change it. 
C) Cancellability was viewed as mitigating the executory nature of lease contracts. 
D) It greatly increased the number of leases that were capitalized. B

Question 3

Only leases that would be considered true leases in the eyes of the law are capitalized.

Accepted Answer

A) True 
 B)False  False

Question 4

The G4+1 report on leases would make all leases financing leases.

Accepted Answer

A) True 
 B)False

Question 5

It was in the 1940s that accounting policy-makers first responded to the lease accounting problem.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following is one of the criteria that have been suggested for lease capitalization?

Accepted Answer

A) The lessee treats lease payments as periodic expenses. 
B) The lessor pays costs normally incident to ownership. 
C) The lessee treats the lease as a purchase for tax purposes. 
D) Leased property is special purpose to the lessor. 
A) The lessee treats lease payments as periodic expenses. 
B) The lessor pays costs normally incident to ownership. 
C) The lessee treats the lease as a purchase for tax purposes. 
D) Leased property is special purpose to the lessor.

Question 7

The legal form of a lease is an executory, or unperformed, contract.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following applies if a lease is interpreted as unilaterally unperformed by the lessee?

Accepted Answer

A) The lease contract is fully executed by the lessor when possession of the leased asset is transferred to the lessee. 
B) An asset and liability do not exist for the lessee. 
C) The lessor permits use of the asset for one period at a time and only if the rentals are paid by the lessee. 
D) Current lease payments are expensed by the lessee. 
A) The lease contract is fully executed by the lessor when possession of the leased asset is transferred to the lessee. 
B) An asset and liability do not exist for the lessee. 
C) The lessor permits use of the asset for one period at a time and only if the rentals are paid by the lessee. 
D) Current lease payments are expensed by the lessee.

Question 9

Which of the following is $\underline{not}$ one of the criteria that have been suggested for lease capitalization?

Accepted Answer

A) Lessee builds up a material equity in the leased property. 
B) Lessee pays costs normally incident to ownership. 
C) Lease is between related parties. 
D) Lease agreement is cancelable. 
A) Lessee builds up a material equity in the leased property. 
B) Lessee pays costs normally incident to ownership. 
C) Lease is between related parties. 
D) Lease agreement is cancelable.

Question 10

Which of the following lease treatments interpret the lease contract as an operating lease?

Accepted Answer

A) A rental agreement 
B) A loan equivalent 
C) A sale equivalent 
D) A purchase 
A) A rental agreement 
B) A loan equivalent 
C) A sale equivalent 
D) A purchase

Question 11

A lease must be accounted for as either a rental agreement, a sale equivalent with debt financing, or a loan equivalent by:

Accepted Answer

A) the lessor. 
B) the lessee. 
C) both the lessor and lessee. 
D) none of the above 
A) the lessor. 
B) the lessee. 
C) both the lessor and lessee. 
D) none of the above

Question 12

How does lease accounting under the IASB differ from lease accounting under FAS?

Accepted Answer

FASB has a rules based orientation with

Question 13

Which of the following is not a supplemental disclosure by the lessee required by SFAS No. 13 for noncancellable operating leases in excess of one year?

Accepted Answer

A) Future minimum rental payments in aggregate and for each of the succeeding five periods 
B) The present value of minimum lease payments 
C) Total minimum rentals to be received under non-cancellable subleases 
D) Rental expenses with separate totals for minimum rentals, contingent rentals, and sublease rentals 
A) Future minimum rental payments in aggregate and for each of the succeeding five periods 
B) The present value of minimum lease payments 
C) Total minimum rentals to be received under non-cancellable subleases 
D) Rental expenses with separate totals for minimum rentals, contingent rentals, and sublease rentals

Question 14

Classifying leases as either operating or capital leases is an example of attempting to establish finite uniformity.

Accepted Answer

A) True 
 B)False

Question 15

Discuss the effectiveness of SFAS No. 13 in addressing the lease capitalization problem.

Accepted Answer

The problem that many leases are not bei

Question 16

An argument against lease capitalization was that the use of present value discounting techniques introduced less reliable accounting numbers into the financial statements.

Accepted Answer

A) True 
 B)False

Question 17

Respond to the following:
a.What are the current criteria for capitalization identified in SFAS No. 13?
b.How is the minimum lease payment calculated?

Accepted Answer

a.The four criteria for capitalization a

Question 18

Prior to ARB 38, the accounting procedure for lease payments was to record them as periodic revenues for lessors and as purchases of assets for lessees.

Accepted Answer

A) True 
 B)False

Question 19

ARB 43 recommended capitalization for leases that were, in substance, installment purchases.

Accepted Answer

A) True 
 B)False

Question 20

A sale and leaseback occurs when the owner of an asset sells it and enters into a lease agreement to lease the asset back.

Accepted Answer

A) True 
 B)False

SFAS No. 13 identifies four capitalization tests that are now applicable to both lessees and lessors.

Which of the following is a true statement regarding APB Opinion No. 5?

Only leases that would be considered true leases in the eyes of the law are capitalized.

The G4+1 report on leases would make all leases financing leases.

It was in the 1940s that accounting policy-makers first responded to the lease accounting problem.

Which of the following is one of the criteria that have been suggested for lease capitalization?

The legal form of a lease is an executory, or unperformed, contract.

Which of the following applies if a lease is interpreted as unilaterally unperformed by the lessee?

Which of the following is $\underline{not}$ one of the criteria that have been suggested for lease capitalization?

Which of the following lease treatments interpret the lease contract as an operating lease?

A lease must be accounted for as either a rental agreement, a sale equivalent with debt financing, or a loan equivalent by:

How does lease accounting under the IASB differ from lease accounting under FAS?

Which of the following is not a supplemental disclosure by the lessee required by SFAS No. 13 for noncancellable operating leases in excess of one year?

Classifying leases as either operating or capital leases is an example of attempting to establish finite uniformity.

Discuss the effectiveness of SFAS No. 13 in addressing the lease capitalization problem.

An argument against lease capitalization was that the use of present value discounting techniques introduced less reliable accounting numbers into the financial statements.

Respond to the following: a.What are the current criteria for capitalization identified in SFAS No. 13? b.How is the minimum lease payment calculated?

Prior to ARB 38, the accounting procedure for lease payments was to record them as periodic revenues for lessors and as purchases of assets for lessees.

ARB 43 recommended capitalization for leases that were, in substance, installment purchases.

A sale and leaseback occurs when the owner of an asset sells it and enters into a lease agreement to lease the asset back.

An Introduction to Accounting Theory

Accounting Theory and Accounting Research

Development of Institutional Structure of Financial Accounting

The Economics of Financial Reporting Regulation

Postulates, Principles, and Concepts

The Search for Objectives

The Fasbs Conceptual Framework

Usefulness of Accounting Information to Investors and Creditors

Uniformity and Disclosure: Some Policy-Making Directions

International Accounting

The Balance Sheet

The Income Statement

Statement of Cash Flows

Income Taxes and Financial Accounting

Pensions and Other Postretirement Benefits

Intercorporate Equity Investments

Filters

Exam 16: Leases

SFAS No. 13 identifies four capitalization tests that are now applicable to both lessees and lessors.

Which of the following is a true statement regarding APB Opinion No. 5?

Only leases that would be considered true leases in the eyes of the law are capitalized.

The G4+1 report on leases would make all leases financing leases.

It was in the 1940s that accounting policy-makers first responded to the lease accounting problem.

Which of the following is one of the criteria that have been suggested for lease capitalization?

The legal form of a lease is an executory, or unperformed, contract.

Which of the following applies if a lease is interpreted as unilaterally unperformed by the lessee?

Which of the following is not‾\underline{not}not​ one of the criteria that have been suggested for lease capitalization?

Which of the following lease treatments interpret the lease contract as an operating lease?

A lease must be accounted for as either a rental agreement, a sale equivalent with debt financing, or a loan equivalent by:

How does lease accounting under the IASB differ from lease accounting under FAS?

Which of the following is not a supplemental disclosure by the lessee required by SFAS No. 13 for noncancellable operating leases in excess of one year?

Classifying leases as either operating or capital leases is an example of attempting to establish finite uniformity.

Discuss the effectiveness of SFAS No. 13 in addressing the lease capitalization problem.

An argument against lease capitalization was that the use of present value discounting techniques introduced less reliable accounting numbers into the financial statements.

Respond to the following: a.What are the current criteria for capitalization identified in SFAS No. 13? b.How is the minimum lease payment calculated?

Prior to ARB 38, the accounting procedure for lease payments was to record them as periodic revenues for lessors and as purchases of assets for lessees.

ARB 43 recommended capitalization for leases that were, in substance, installment purchases.

A sale and leaseback occurs when the owner of an asset sells it and enters into a lease agreement to lease the asset back.

An Introduction to Accounting Theory

Accounting Theory and Accounting Research

Development of Institutional Structure of Financial Accounting

The Economics of Financial Reporting Regulation

Postulates, Principles, and Concepts

The Search for Objectives

The Fasbs Conceptual Framework

Usefulness of Accounting Information to Investors and Creditors

Uniformity and Disclosure: Some Policy-Making Directions

International Accounting

The Balance Sheet

The Income Statement

Statement of Cash Flows

Income Taxes and Financial Accounting

Pensions and Other Postretirement Benefits

Intercorporate Equity Investments

Filters

Which of the following is $\underline{not}$ one of the criteria that have been suggested for lease capitalization?