MIDTERM

Roxanna Corporation makes $2,000 payments every month for leasing office equipment. Roxanna. recorded a lease payment as follows. Crystal must have a(n):

Operating lease.

From the perspective of the lessor, two possible lease classifications are:

Operating or sales-type.

For the lessee to account for a lease as a finance lease, the lease must meet:

Any one of the five criteria specified by GAAP regarding accounting for leases.

When using the equity method to account for an investment, cash dividends received by the investor from the investee should be recorded:

As a reduction in the investment account.

For a finance lease, an amount equal to the present value of the lease payments should be recorded

Asset and a liability.

For a finance lease, an amount equal to the present value of the lease payments should be recorded by the lessee as a(n):

Asset and a liability.

Which of the following is not one of the lease classification tests (use memory tip)?

Collectability

Treasury Stock?

Contra Equity

Allowance for Doubtful Accounts?

Current assets

Deferred Income Taxes (credit) that will reverse next year?

Current liabilities

Which of the following investment securities held by Justin W. Inc. are not reported at fair value in its balance sheet?

Debt securities held to maturity.

Preferred Stock, par $100, 5%?

Equity Account (Positive amount)

Accumulated Other Comprehensive Income?

Equity Account Positive amount

Investments in debt securities available for sale are reported at:

Fair value on the reporting date.

From the perspective of the lessee, leases may be classified as either:

Finance or operating.

Bonds that are purchased with the intent of selling them in the near future to take advantage of short-term price changes are classified as:

Held-to-maturity securities.

The costs that (a) are associated directly with consummating a lease, (b) are essential to acquire the lease, and (c) would not have been incurred had the lease agreement not occurred, are referred to as initial direct costs. Initial direct costs incurred by the lessor are deferred and expensed over the lease term:

In both an operating lease and a sales-type lease with no selling profit.

Held to Maturity Securities?

Investments

In an operating lease, the lessee records on the income statement

Lease expense

In an operating lease, the lessee records on the income statement?

Lease expense

GAAP regarding fair value accounting for investments in equity securities will generally apply to an investment when the percentage of ownership of another company is:

Less than 20%.

Ten-year noncancelable lease agreement. (credit)?

Long-term debt (Liabilities)

BUDGET for Property and Plant that company will acquire in the 2019.

Note or not reported on Balance Sheet

The appropriate asset value reported in the balance sheet by the lessee for an operating lease is:

Present value of the lease payments.

Which of the following increases the investment account under the equity method of accounting?

Recognition of the subsidiary's income.

Accumulated Other Comprehensive Income in the shareholders' equity section of the balance sheet reflects changes in the fair value of securities for which type of securities?

Securities available for sale.

For a sales-type lease for a lessor involving a guaranteed residual value at the end of the lease term will report sales revenue in the period of inception of the lease at which of the following amounts

The sales price plus the current value (present value) of the residual value.

The income statement reports changes in fair value for which type of investment securities?

Trading securities.