Accounting 302 Chapter 18
Kataran Company enters into a 4minus−year lease transaction, with payments due at the beginning of each year. The lease payments are $78,000 per year. The fair value of the leased asset is $290,000. The lessor's deferred initial direct costs are equal to $24,000. The lessor's estimate of the unguaranteed residual asset is $155,000.
(4,-78000,314000,-155000,1) =20.61%
Prior to 2019, lessees did not include the rightminus−ofminus−use asset and the lease liability for operating leases on their balance sheets. Both FASB and IASB wrote new standards to require that lessees nearly always report an asset and liability on their balance sheets when they engage in alease transaction. This accounting results in which of the following?
a more faithful rep of the rights and obligations arising from leases
Which of the following items are not examples of initial direct lease costs?
all the above are indirect lease costs
In instances where there is not an observable standalone selling price, the lessor must use an estimate of the standalone selling price and allocate it based on which of the following methods?
expectedcostplus a margin, residual approach, adjusted market assessment approach
In general, the cost of an asset over the life of the lease is lower than if the lessee purchased the asset.
false
The initial direct costs cannot be deferred and the lessor must expense initial direct costs at the lease commencement.
false
After identifying a lease, both the lessee and the lessor are required to separate the various lease and nonlease components and allocate consideration to these components.
true
Present value of lease payments + Present value of guaranteed or unguaranteed residual asset = Fair value of leased asset + Deferred initial direct costs.
true
When a company purchases equipment by issuing a longminus−term note, the interest element of the payment is tax deductible. However, if the company leases equipment, the entire lease payment may be tax deductible.
true
Kataran Company enters into a 4−year lease transaction, with payments due at the beginning of each year. The lease payments are $78,000 per year. The fair value of the leased asset is$290,000. The lessor's deferred initial direct costs are equal to$24,000. The lessor's estimate of the unguaranteed residual asset is $125,000. Based on the above information, what is the implicit rate in the lease for Kataran?
17.61%
Kataran Company enters into a 4minus−year lease transaction, with payments due at the beginning of each year. The lease payments are $ 78 comma 000$78,000 per year. The fair value of the leased asset is $ 290 comma 000$290,000. The lessor's deferred initial direct costs are equal to $ 24 comma 000$24,000. The lessor's estimate of the unguaranteed residual asset is $ 150 comma 000$150,000. Based on the above information, what is the implicit rate in the lease for Kataran
20.13%
Which of the following assets is always considered a separate lease component in a lease, unless the impact on the financial statements of not separating it from the other asset(s) is insignificant?
land
The ________ date is when the lease agreement is signed. The ________ date is the date on which the lessee is allowed to begin using the leased asset.
lease inception, lease commencement
If the lessor meets any one of the five Group I criteria, then the lessor classifies the lease as a ________. If the lessor meets both of the Group II criteria, but none of the Group I criteria, then the lessor classifies the lease as a ________. If the transaction does not meet either the Group I or Group II criteria, then the lessor classifies the lease as a ________.
salesminus−type lease; direct financinglease; operating lease
