AC311 Chapter 15

finance lease

A lease structured as an installment purchase is a _____ by the lessee

90% or more

_____ of the fair vale of the assets amounts to "substantially all" of the fair value

operating lease

a lease that is more true to the nature of a rental agreeement

lease

contract in which an owner provides a user the right to use an asset in return for periodic cash payments over a period of time

sales type with no selling profit

deferred and expensed over the lease term by increasing the lease with receivables

operating lease

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

rental or purchase

depending on the nature of the leasing agreement a lease is accounted for as a ____

sales type lease with selling profit

expensed at the beginning of the lease

operating activity

for a sales type lease the lessor should report cash received on the lease as an

operating lease

in an ____ recording lease expense should reflect straight line rental of the the asset during the lease term

right of use asset

is amortized straight line unless the lessee's pattern of using the asset is different

lesser

must disclose its net investments in the lease

lessor

owner of the property

implicit rate

the effective interest rate of return the lease payments provide the lessor

sales type lease

the lessor records a lease receivable at the inception of the lease

incremental borrowing rate

the rate the lessee would expect to pay a bank if funds were borrowed to purchase the asset

lessee

user of the property

operating and finance

two basic lease classifications by a lessee are