A lessee should initially recognize a right-of-use asset at cost. This cost figure includes: The undiscounted amount of the lease payments to be made after commencement of the lease The amount of the initial measurement of the lease liability Any initial direct costs incurred by the lessor The fair value of the underlying asset
Q: Briefly describe the conceptual basis for asset and liability recognition under the right-of-use…
A: lessee is the tenant or the person who holds the property or asset under lease. Right of use means…
Q: Initially, a lease liability is measured a. by the lessee at the present value of the lease…
A: Lease means giving out the assets by lessor to lessee to use that assets in return of rent.…
Q: Describe the effect of a “bargain-purchase option” onaccounting for a capital lease transaction by a…
A:
Q: The lessee recognizes a loss on finance lease when the fair value of the leased asset is _______…
A: Solution: When at the end of lease term, fair value of leased asset is lesser than the guaranteed…
Q: List the sequence of events for the lessee that leads to a lease arrangement.
A: The legal agreement where there are two parties, one party convinces his property to another party…
Q: 1. The right-of-use asset shall be initially recognized at cost, which shall be comprise of the…
A: “Since you have asked multiple question, we will solve the first question for you. If you want any…
Q: Describe the accounting procedures that must be followed by a lessee when employing the operational…
A: The Question is about the accounting procedures that must be followed by a lessee when employing the…
Q: The situation which would normally lead to a lease being classified as a finance lease include all…
A: Lease contract can be defined as an agreement between two parties, lessor and lessee. It is contract…
Q: a sale-leaseback transaction, the right-of-use asset is computed as: a. Rights retained by the…
A: Leaseback refers to the concept when an asset sold by an entity is leased back from the buyer.
Q: Which of the following should be included by the lessee in determining the amount of the…
A: Lease: Lease is a contractual agreement whereby the right to use an asset for a particular period…
Q: Which of the following is not included in the evaluation questions of IFRS 16 in identifying a lease…
A: These are all the questions tDoeso be evaluated whole entering into a lease contract:: the lessee…
Q: Briefly discuss the conceptual foundation for asset and liability recognition in a lease transaction…
A: The question tells about the conceptual foundation for asset and liability recognition in a lease…
Q: At the beginning of a Type B lease, the lessor will record what asset and liability, if any?
A: Lease:An agreement of contract that is made to transfer the right to utlize the resources for a…
Q: If there is a reasonable certainly that lessee will obtain ownership by the end of the lease term,…
A: Useful life of the asset or lease term, whichever is shorter
Q: Which of the following statements about purchase option is correct? The lessee includes its present…
A: The bargain purchase option is the right to purchase assets after the expiry of the lease term. The…
Q: Which of the following is a criterion for classifying a lease for a lessee as a finance lease? The…
A: Answer: Option 4 - All of the above. Reason: If a lease meets one or more of the following criteria,…
Q: When a lease modification results in partial termination of a lease, the change shall be accounted…
A: Answer is option D) The increase (decrease) in lease liability as a result of the lease modification…
Q: Explain how an entity would initially and subsequently measure its right-of-use asset and lease…
A: Lease Liability: Initial measurement: The Lease Liability is initially measured at the present…
Q: In computing amortization of a leased asset where there is no bargain purchase option, the lessee…
A: Lease An arrangement is considered to give control over the use of an asset when the lessee has…
Q: The appropriate valuation of an operating lease in the balance sheet of the lessee is? right of use…
A: The appropriate valuation of an operating lease in the balance sheet of the lessee is Nil.... Only…
Q: Which of the following statements are false under a sale a leaseback transaction? I. If a sale and…
A: In the given case Option II only is the incorrect and False Statement.... If the sale price is…
Q: Generally accepted accounting principles require that certain lease agreements be accounted for as…
A: Generally accepted accounting principles require that certain lease agreements be accounted for as…
Q: iability multiplied by useful life divided by total fair value of the asset. FV of rights retained…
A: Leaseback refers to the form of arrangement that sold an asset and also has an option to lease it…
Q: Which of the following statements is true about initial direct costs? A. Initial direct costs of a…
A: According to the Generally Accepted Accounting Principle, initial direct cost is defined as the…
Q: hen a lease transfers ownership to the lessee by the end of the lease term, the underlying asset is…
A: Solution: As per IAS 17, "If there is no reasonable certainty that the lessee will obtain ownership…
Q: At the beginning of an operating lease, the lessee will record what asset and liability, if any?
A: During the lease period if ownership of the asset is not transferred to Lessee. Lessee has only…
Q: Assume a lessee leases equipment and insists on terms that qualify it as an operating lease, barely…
A: In simple term lease means it was a specific contract or agreement between the two parts to use the…
Q: A lessee should classify a lease transaction as a capital lease if it is noncancelable and one or…
A: Explain the criteria for defining the lease as capital lease or operating lease: As per the notes…
Q: A lease agreement will qualify as a finance lease if one of these conditions occur: A. The lessee…
A: Lease: It can be defined as a contractual agreement where one party known as lessor grants the right…
Q: In calculating the amortization of a leased asset, the lessee should subtract a Select one: a.…
A: Amortization- Amortization refers to spreading payments over manifold periods. The word is used for…
Q: . The capitalized costs of Right-of-use Asset includes the following I. Present value of the lease…
A: The right-of-use asset, also known as an ROU asset, seems to be a lessee's power using a leased…
Q: In a sale and leaseback transaction, what is used by the buyer-lessor to depreciate the cost of the…
A: In a sale and leaseback transaction, what is used by the buyer-lessor to depreciate the cost of the…
Q: In a lease that is not assified as a manufacturer's ase, initial direct cost is * a. added to the…
A: Solution: In a lease that is not classified as a manufacturer's lease, initial direct cost is "added…
Q: Which of the following statements characterizes a sales-type lease? A)The lessor recognizes only…
A: SOLUTION- SALES TYPE LEASE IS A FINANCE LEASE IN WHICH THE FAIR MARKET VALUE (OR IF LOWER , THE PV…
Q: The amount of gain (loss) on sale and leaseback transaction is: A. The difference of fair value and…
A: Gain is booked when money is received on the sale of the asset. leasing back can be assumed to be…
Q: A government entity, which is a lessee under a finance lease. recognizes an asset acquired under a…
A: Comment- We’ll answer the first question since the exact one wasn’t specified. Please submit a new…
Q: The lessee normally measures the lease liability to be recorded as the: Select one: a. Present…
A: Lease: Lease is a contractual agreement whereby the right to use an asset for a particular period of…
Q: For a depreciable asset, the amount of depreciation recognised shall be in accordance with AASB 116.…
A: According to AASB 116: Depreciation is a systematic allocation of the depreciable amount of an asset…
Q: Compare the way a purchase option that is reasonably certain to be exercised and a lessee-guaranteed…
A: Definition: Lease: Lease is a contractual agreement whereby the right to use an asset for a…
Q: Which statement characterizes an operating lease? The lessor records depreciation and lease…
A: Solution: Following statement characterizes finance lease: The lessee records depreciation and…
Q: At the beginning of an operating lease, the lessor will record what asset or assets, if any?
A: An operating lease is a contract that allows for the use of an asset but does not convey ownership…
Q: Occasionally, a lease agreement includes a guarantee by the lessee that the lessor will recover a…
A:
Q: Which of the following lease-related revenue and expense items would be recorded by the lessor if…
A: A lessor is someone who rents or lease an asset without transferring the ownership rights. A lessee…
Q: Which of the following statements regarding the calculation of the lessee's amortization expense for…
A: Lease classify as sale type lease means it is a financial lease where lessor has given right to use…
Q: When a sale-leaseback transaction occurs, if the leaseback is considered to be an operating lease,…
A:
Q: How should an entity account for a short-term or low-value lease under PFRS 16? Group of answer…
A: Lease is a contract between two parties lessor and lessee. Lessor provides it's asset for use to…
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
- Which of the following should be included by the lessee in determining the amount of the right-to-use asset and lease liability:The residual value is the estimated fair value of theleased property at the end of the lease term.(a) Of what significance is (1) an unguaranteed and (2) aguaranteed residual value in the lessee’s accountingfor a capitalized-lease transaction?(b) Of what significance is (1) an unguaranteed and (2) aguaranteed residual value in the lessor’s accountingfor a direct-financing lease transaction?Which of the following should be included by the lessee in determining the amount of the right-to-use asset and lease liability: a. Fixed Payments: Yes/Unguaranteed Residual Value: Nob. Fixed Payments: Yes/Unguaranteed Residual Value: Yesc. Fixed Payments: No/Unguaranteed Residual Value: Yesd. Fixed Payments: No/Unguaranteed Residual Value: No
- For a lease that transfers ownership of the property to the lessee by the end of the lease term, the lessee should: a.amortize the right-of-use asset over the economic life of the asset in a manner consistent with the lessee's normal depreciation policy for owned assets b.amortize the right-of-use asset over the lease term in a manner consistent with the lessee's normal depreciation policy for owned assets c.record each lease payment as lease expense d.combine interest expense and amortization expense and report as a single lease expenseThe initial direct cost is added to the cost of the asset to get the netinvestment in the lease which shall be spread over the lease term. Question: True or FalseThe appropriate valuation of an operating lease in the balance sheet of the lessee is? right of use asset present value of lease payments nil gross amount of lease payments
- In calculating the amortization of a leased asset, the lessee should subtract a Select one: a. guaranteed residual value and amortize over the term of the lease. b. unguaranteed residual value and amortize over the term of the lease. c. guaranteed residual value and amortize over the life of the asset. d. unguaranteed residual value and amortize over the life of the asset. e. None of the above.Which of the following statements is/are not true? Interest expense on the lease liability will increase the carrying amount of the liability. A lessee shall measure the lease liability at the present value of the lease payments that are not paid at that date, using the lessee's incremental borrowing rate. Right-of-use asset cost will include an estimates cost to be incurred by the lessee in dismantling and removing the underlying asset, restoring the site on which it is located or restoring the underlying asset to the condition required by the terms and conditions of the lease. Group of answer choices Only statement 2. All statements are true. Only statements 2 and 3. None of the statements are true.9. Baa Co. enters into a lease of commercial space. The contract specifies a non-cancellable term of five years and a two-year, market-priced commencement, Baa Co. makes significant leasehold improvements with a useful life of ten years. Baa Co. determines that the economic benefits of the leasehold renewal option. Before the lease improvements can only be realized through continued of the leased property. At lease commencement, Occupancy b. 5 years c. 7 years d. 10 years a. 2 years Which of the following statements is incorrect regarding the accounting for lease liabilities? Lease liabilities are subsequently measured at amortized cost, adjusted for lease modifications and reassessments. b. Subsequent lease payments are apportioned to both the interest and the principal balance of the lease liability. c Periodic interests reflect a varying rate of interest on the remaining balance of the lease liability. d. Periodic interests reflect a constant rate of interest on the remaining…
- Initially, a lease liability is measured a. by the lessee at the present value of the lease payments that are not paid at the commencement date of the lease. b. by the lessor at the present value of the total lease payments payable at the commencement date of the lease. c. by the lessor at the total cost of the right-of-use asset. d. by the lessee at the total cost of the right-of-use asset.In a sale-leaseback transaction, the right-of-use asset is computed as: a. Rights retained by the lessor multiplied by rights retained by the lessee divided by FV of the asset. b. Carrying value of the asset multiplied by the FV of rights retained by the lessee divided by fair value of the asset. c. Lease liability multiplied by useful life divided by total fair value of the asset. d. FV of rights retained by the lessee multiplied FV of the asset divided by carrying value of the asset.Occasionally, a lease agreement includes a guarantee by the lessee that the lessor will recover a specified residual value when custody of the asset reverts back to the lessor at the end of the lease term. Under what circumstance can the guaranteed residual value influence the amounts recorded by the lessee and lessor? In that circumstance, how are the amounts affected?