Chapter 15

Which of the following require lease accrual?

Bond, note, lease.

Which of the following is not a criteria used to determine if a lease is a capital lease for the lessee.

The lease contains a bargain renewal option.

Which of the following are the criteria used to determine if a lease is a capital lease for the lessee?

The lease term is for 75% or more of the useful life of the leased asset. The lease contains a bargain purchase option. The PV of the minimum lease payments is 90% or more of the fair value of the leased asset. Title to the property is transferred at the end of lease period.

Which of the following occur in a sale-leaseback transaction?

The lessee pays periodic rental payments. The lessee receives cash from the sale of the asset.

A lease that is essentially an installment purchase is classified as a

capital lease.

Which of the following are required disclosures related to leases?

contingent rentals, residual values, and exercutory costs

Under IFRS, the lessor uses the

implicit interest rate to calculate the PV of the minimum lease payments.

Under U.S. GAAP, the lessee uses the

incremental borrowing rate.

If a lease does not meet any of the four criteria to be classified as a capital lease, it is classified an

operating lease.

In an operating lease, periodic rental payments are

recorded as rent expense by the lessee. recorded as rent revenue by the lessor.