ACC 221 Chapter 15C Smartbook LO 7-9

Pataasin ang iyong marka sa homework at exams ngayon gamit ang Quizwiz!

How is a fixed payment for hazard insurance or property taxes treated in a lease agreement? As a transfer of goods to the lessee As an expense to the lessor As part of the lease payments As a separate nonlease component

As part of the lease payments

Match the treatment of initial direct costs incurred by the lessor with the correct lease classification. Sales-type lease with no selling profit

Deferred and expensed over the lease term by increasing the lease receivable

Select all that apply Which of the following are required disclosures for lessees and lessors? identity of the lessee and lessor description of the leasing arrangements future payments for total remaining years future payments in each of the next 5 years

description of the leasing arrangements future payments for total remaining years future payments in each of the next 5 years

Legal fees for executing lease documents, and the preparation and processing cost of lease documents are referred to as lease direct costs. leasehold improvements initial direct costs. nonlease cost components

initial direct costs.

The _____ must disclose their lease transactions and regular transactions separately. lessor lessee both the lessee and lessor

lessor

A lessee makes improvements to leased property. At the end of the lease the property reverts back to the lessor. How should the costs of the improvements be classified? Capitalize and amortize over asset useful life to the lessee. Deduct from the rent expense for the period. Deduct from the lease account. Expense in the current period.

Capitalize and amortize over asset useful life to the lessee.

Which of the following is true regarding how a lessor reports cash flows from a sales-type lease? Cash receipts are reported as cash inflows from investing activities. Cash receipts are reported as cash inflows from financing activities. The portion that represents interest revenue is reported as operating, and the remainder is reported as financing. Cash receipts are reported as cash inflows from operating activities.

Cash receipts are reported as cash inflows from operating activities.

Match the treatment of initial direct costs incurred by the lessor with the correct lease classification. Operating lease

Deferred and expensed over the lease term typically on a straight-line basis

Match the treatment of initial direct costs incurred by the lessor with the correct lease classification. Sales-type lease with selling profit

Expensed at the beginning of the lease

When is a nonlease component of a lease agreement recorded separately from the lease payments? When the amount represents transfer of a good or service to the lessee. When the amount is greater than 10% of the total lease payment. When the amount represents transfer of a good or service to the lessor. When the amount is paid for hazard insurance.

When the amount represents transfer of a good or service to the lessee.

Initial direct costs incurred by the lessee are added to the right-of-use asset. deferred and expensed over the lease term. expensed at the beginning of the lease.

added to the right-of-use asset.

Initial direct costs include (Select all that apply) costs necessary to acquire the lease leasehold improvements that extend the life of the leased asset legal fees for lease negotiations and drafting documents costs that would not have been incurred if the lease agreement did not exist costs associated with completing the lease agreement

costs necessary to acquire the lease costs that would not have been incurred if the lease agreement did not exist costs associated with completing the lease agreement

Initial direct costs include (Select all that apply) legal fees for lease negotiations and drafting documents costs that would not have been incurred if the lease agreement did not exist costs necessary to acquire the lease leasehold improvements that extend the life of the leased asset costs associated with completing the lease agreement

costs that would not have been incurred if the lease agreement did not exist costs necessary to acquire the lease costs associated with completing the lease agreement

North Company leased equipment from Lease Corp in a finance/sales-type lease. The annual payments equal $105,000. Payments include $5,000 which Lease Corp will use to pay the annual maintenance fee on the equipment. How should Lease Corp record the first payment? (Select all that apply) credit maintenance fee payable $5,000 debit cash $105,000 credit lease receivable $105,000 debit cash $100,000 credit lease receivable $100,000

credit maintenance fee payable $5,000 debit cash $105,000 credit lease receivable $100,000

North Company leased equipment from Lease Corp in a finance/sales-type lease. The annual payments equal $105,000. Payments include $5,000 which Lease Corp will use to pay the annual maintenance fee on the equipment. How should North Company record the first payment? (Select all that apply) credit cash $100,000 debit maintenance expense $5,000 debit lease payable $100,000 debit lease payable $105,000 credit cash $105,000

debit maintenance expense $5,000 debit lease payable $100,000 credit cash $105,000

An advanced payment on an operating lease should be classified by the lessor as a lease receivable. a contra-asset. rent expense for the period. deferred rent revenue.

deferred rent revenue.

When a portion of a lease payment represents the transfer of a good or service to the lessee, it is considered a bargain purchase option residual asset nonlease component variable lease payment

nonlease component

When a portion of a lease payment represents the transfer of a good or service to the lessee, it is considered a nonlease component residual asset bargain purchase option variable lease payment

nonlease component

For a sales-type lease, the lessor should report cash received on the lease as a(n) ______ activity. operating financing investing noncash investing

operating

In which section of the statement of cash flows should a lessee report payments on an operating lease? operating financing investing other significant noncash activities

operating

In which section of the statement of cash flows should a lessor report the receipt of payments on an operating lease? financing other significant noncash activities operating investing

operating

In a finance lease, the lessee reports the interest portion of the payment as a cash outflow from _____ activities, and it reports the portion representing principal repayment as a cash outflow from _____ activities.

operating financing or finance

In a finance lease, the lessee records the interest portion of payments as a cash outflow from _____ activities, and the principal portion as a cash outflow from _____ activities on the Statement of Cash Flows. financing; operating operating; investing operating; operating operating; financing investing; operating

operating; financing

A fixed payment for hazard insurance or property taxes is considered to be separate goods or services. part of the lease payments. payment for non lease components.

part of the lease payments.

An advanced payment on an operating lease is allocated to _____ over the lease term by the lessor. prepaid rent rent revenue unearned revenue rent expense

rent revenue

Select all that apply Which of the following are required disclosures related to leases? identity of the lessor residual values identity of the lessee nonlease payments variable lease cost

residual values nonlease payments variable lease cost

A leasehold improvement should be depreciated or amortized over the shorter of the physical life of the asset or the lease term. the longer of the physical life of the asset or the lease term. the physical life of the asset. the lease term.

the shorter of the physical life of the asset or the lease term.


Kaugnay na mga set ng pag-aaral

Contemporary Social Issues Chapter 1

View Set

Chapter 5 - Strategies in Action

View Set

Latina (J. Plašilová) - 1. deklinace

View Set

FIN 250 Chapter 7: Auto and Home Loans

View Set

God's Big Picture: Intro, Chapters 1-3 and Genesis

View Set