How do the lessee and lessor will agree to modify the terms of a lease before the lease term ends?

Q: A lease might specify that rental payments may be increased (or decreased) at some future time…

A: The contingent rentals are excluded from lease payments. Instead they are reported in the disclosure…

Q: What is a purchase option? How does it affect accounting for a lease?

A: Purchase option : A purchase option is an agreement that gives the lessee a choice to purchase the…

Q: Discuss how the lease liability would be measured at lease inception.

A: Lease Liability is the present value of the financial obligation of the lease for the lease…

Q: How does the existence of leasehold improvements can affect the determination of the lease term?

A: Leasehold Improvements are referred to as any of the changes or improvements made to the rental…

Q: 3. Which of the following is true in regards to the reassessment of the lease term? A. If the lessee…

A: Lease term is the time period agreed by the lessee and the lessor for which the asset shall be…

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: 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: True or False   Lease payments are paid by the lessor.

A: Lessor is the legal owner of the property.Lessor leases the property he owns to lessee for rental…

Q: In accounting for a finance lease/sales-type lease, how are the lessee’s and lessor’s income…

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Q: Why would a lease include a contingent payment provision? Explain.

A: Contingency payment provisions is a provision for a possible event or circumstance which is not…

Q: What is a “per procedure” lease and how does it differ from a standard lease?

A: A lease is the written agreement between the two parties in which one transfers the asset to the…

Q: Explain when does a contract meet the definition of a lease?

A: According to IFRS 16 a lease is defined as, "a contract, or part of a contract, that conveys the…

Q: The discount rate influences virtually every amount reported in connection with a lease by both the…

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Q: what is the value of the lease?

A: Value of Perpetual annuity = PMT/r PMT is the monthly payment r is the monthly compounded rate.…

Q: Packer Company (the lessor) concludes that its lease meets one of the tests to be classified as a…

A: Lease: It refers to the contract between two parties, that is, Lessee(user) and lessor (owner)…

Q: What do you think is the main difference of accounting for lease on the part of the lessee and…

A: Lease is regarded as the contract between two parties those to use the asset of the owner by another…

Q: Why the lease is considered a “short-term lease”?

A: Lease:   It is an agreement between an owner of an asset (Lessor) and a tenant (lessee) where the…

Q: When can a lease create both an asset and a liability for the lessee?

A: Lease is an agreement between two persons in which one grants the right to another to use a…

Q: What is the balance of the lease after the first lease payment?

A: Annual Payments : $30,000. Lease Terms: 12 years  Implicit Interest rate : 8% Present Value :…

Q: Who are the two parties to a lease transaction?

A: Lease: Leases are agreements in which the proprietor of the asset permits another party to utilize…

Q: When should a lessor recognize in income a nonrefundable lease bonus paid by a lessee on signing an…

A: A non-refundable lease bonus paid by a lessee on signing an operating lease is treated as deferred…

Q: Why is lease reporting required? Justification for your answer.

A: A lease is an arrangement in which an asset is rented out, and the Lessor gets a rental payment in…

Q: In a lease that is appropriately recorded as a direct-financing lease by the lessor, unearned…

A: A lease is a contractual agreement between two parties wherein the lessor (owner) provides the right…

Q: distinguish between a fi nance lease and an operating lease from the perspectives of the lessorand…

A: Difference between a finance lease and an operating lease from the perspectives of the lessorand the…

Q: Is there a need to amortize deferred rent income/unearned rent income in an operating lease?

A: There are two type of lease which are, (1) Operating lease  (2) Finance lease In operating lease,…

Q: The term of a finance lease includes the initial lease term and any bargain renewal terms.    True…

A: The answer for the True or false question is discussed hereunder : What is a finance lease?  Finance…

Q: In accounting for a Type B lease, how are the lessee’s and lessor’s income statements affected?

A: When accounting for finance lease/ Sales type lease, lease payments are made during the term of…

Q: What are the benefits to lessees of operating lease accounting?

A: Operating lease: The operating lease refers to the contract between two parties where one party…

Q: Describe what if Lease Terms are modified?

A: Lease Terms are the terms on which both lessor and lessee agrees to enter into a specific lease. It…

Q: What are the primary benefits to a lessor of entering into a lease arrangement

A: The primary benefits to a lessor of entering into a lease arrangement will be explained:

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: The discount rate influences virtually every amount reported in connection with a lease by both the…

A: The lessor’s discount rate is the effective interest rate when determining the present value of…

Q: The basic concept of “substance over form” influence lease accounting. Explain in detail how it does…

A: Substance over form is an accounting concept that business transactions should be accounted in…

Q: When are initial direct costs recognized in an operating lease? In a direct financing lease? In a…

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Q: What nonlease costs might be included as part of lease payments? How are they accounted for by the…

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Q: What is the difference between an operating lease and a financial,or capital, lease?

A: Lease: Leases are agreements in which the proprietor of the asset permits another party to utilize…

Q: What are the ways in which the accounting for the lease is affected?

A: Leases are a special item in accounting. There are mainly 2 types of lease: 1. Operating and 2.…

Q: What are the required lease disclosures for the lessor and lessee?

A: Lease: Lease is a contractual agreement whereby the right to use an asset for a particular period of…

Q: What factors would tend to affect the value of a lease?

A: Lease is a contract between two parties in which one party lends its property or asset to the other…

Q: What is the main purpose of the lease disclosures required of the lessor and lessee?

A: The Answer:

Q: Which of the following are normal characteristics of a financial lease? I. Maintenance of the leased…

A: In a financial lease an entity (lesser) borrows an asset for a considerably long period of time…

Q: What is the initial lease liability?

A: 1. Initial lease liability: Annual rental payable at the end of each year* Present value of an…

Q: What is a short-term lease? Describe lessee accounting for a short-term lease.

A: Short-term LeaseThis is a type of leasing which has a maximum lease term ranging from 1 year or…

Q: What are executory costs? How are they accounted for by the lessee in a capital lease when paid by…

A: Executory costs are the costs related with ownership of an asset which includes maintenance…