Accounting 312 ch. 21

The Lease Liability account should be disclosed as

current portion in current liabilities and the remainder in noncurrent liabilities

Which of the following is an advantage of leasing? Protection against obsolescence. Leases often do not require any down payment. Lease agreements may contain less restrictive provisions than other debt agreements. All of these answer choices are correct.

All of these answer choices are correct

Which one of the following amounts would differ in a sales-type lease with an unguaranteed residual value instead of a guaranteed residual value?

Sales price of the asset

Which of the following is a criterion for a lease to be classified as a finance lease in the books of a lessee?

The lease contains a bargain purchase option

Lessee and lessor entered into a lease. The lease is classified as an operating lease by both the lessee and lessor. The lease term is shorter than the useful life of the asset. How will the leased asset be accounted for?

The lessor will retain the asset on its books and record depreciation expense over the asset's useful life

In computing lease payments, the amount to be recovered by the lessor is the:

fair market value of the leased asset less the present value of the asset's residual value

The distinction for the lessor between a direct financing lease and a sales-type lease is the presence or absence of:

manufacturer or dealer's profit

The lessor expenses initial direct costs in the year of incurrence in a(n)

sales-type lease

In computing the present value of the minimum lease payments, the lessee should

use either its incremental borrowing rate or the implicit rate of the lessor, whichever is lower, assuming that the implicit rate is known to the lessee