What is the treatment of an unguaranteed residual value in determining the cost of sales under a sales type lease? A. The unguaranteeed residual value is ignored. B. The unguaranteed residual value is added to the cost the leased asset. C. The unguaranteed residual value is deducted from the cost of the leased asset at absolute amount. D. The unguaranteed residual value is deducted from the cost of the leased asset at present value.

What is the treatment of an unguaranteed residual value in determining the cost of sales under a sales type lease? A. The unguaranteeed residual value is ignored. B. The unguaranteed residual value is added to the cost the leased asset. C. The unguaranteed residual value is deducted from the cost of the leased asset at absolute amount. D. The unguaranteed residual value is deducted from the cost of the leased asset at present value.

Financial Accounting Intro Concepts Meth/Uses

14th Edition

ISBN:9781285595047

Author:Weil

Publisher:Weil

Chapter11: Notes, Bonds, And Leases

Section: Chapter Questions

Problem 12Q

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What is the treatment of unguaranteed residual value under a dealer’s or manufacturer’s lease? a. Unguaranteed residual value is deducted from the cost of the leased asset at present value, to derive cost of sales. b. Unguaranteed residual value is deducted from the cost of the leased asset at absolute amount, to derive cost of sales. c. The unguaranteed residual value is completely disregarded. d. The unguaranteed residual value is added to the cost of the leased asset at present value, to derive cost of sales.
What is the treatment of unguaranteed residual value in determining the cost of sales under a sales type lease? It is deducted from the cost of leased asset at gross amount. It is ignored. It is deducted from the cost of leased asset at its present value. It is added to the cost of leased asset.
For a(n) ________ lease, a lessor recognizes revenue on the sale and records the asset, ________ lease. It also removes the leased asset from its accounts and records the ________. Group of answer choices sales-type; net investment in lease–sales-type; cost of goods sold finance; gross investment in lease–sales-type; cost of goods sold operating; net investment in lease–sales-type; cost of goods sold sales-type; finance; revenue
Discuss the residual value of the leased asset. How does it impact the PV of rental payments computation of the Lessee and the computation of the rental payment by Lessor?
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.
Which of the following statements is true about initial direct costs? A. Initial direct costs of a sales-type lease should be expensed at the commencement of the lease only if no selling profit or loss has been incurred. B. Initial direct costs are ownership-type costs such as insurance, maintenance, and taxes. C. Initial direct costs of an operating lease should be recorded by the lessor as a prepaid asset. D. Initial direct costs should always be debited against income by the lessor in the period of the inception of the lease.
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 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
Initial direct costs incurred by the lessor under a sales-type lease should be a. Deferred and allocated over the economic life of the leased property. b. Expensed in the period incurred. c. Deferred and allocated over the term of the lease in proportion to the recognition of rental income. d. Added to the gross investment in the lease and amortized over the term of the lease as a yield adjustment.
In a sale-leaseback transaction, the right-of-use asset is computed as: Group of answer choices Carrying value of the asset multiplied by the FV of rights retained by the lessee divided by fair value of the asset. Lease liability multiplied by useful life divided by total fair value of the asset. FV of rights retained by the lessee multiplied FV of the asset divided by carrying value of the asset. Rights retained by the lessor multiplied by rights retained by the lessee divided by FV of the asset.
The effect of an operating lease on the income distribution schedule: checked a. is non-existent b. affects only the lessee's income. c. affects only the lessor's income. d. affects the amount of income or distribution of income between the noncontrolling and controlling interests.
1. Which statement is incorrect about initial direct costs? a. Initial direct costs incurred by the lessee in finance lase are added to the amount recognized as an asset and to the finance lease liability. b. In a direct financing lease, initial direct costs are added to the net investment in the lease. c. In a sales type lease, initial direct costs are expensed as component of cost of goods sold. d. For operating leases, initial direct costs are deferred and allocated over the lease term. 2. If the lessor and lessee use different interest rates to account for a finance lease, then a. The lessor will use different account titles to record the leasing transactions b. Total expenses and revenues will be equal c. Total expenses and revenues will be different d. The lessee and the lessor cannot use different interest rates 3. In the case of a lease of land and building where title to the land is not transferred, the lease is generally treated as if: a. Both land and building are finance…