1. At the beginning of a lease agreement, a lessee's debt to equity ratio and rate of return on assets are both affected regardless of whether the lease is classified as a finance lease or as an operating lease. True or False? True False 2. If the lessee is expected to take ownership of a leased asset at the end of the lease term, the lessor must use an estimated residual value when calculating the lease payments necessary to achieve a desired rate of return. True or False? True False 3. For a right-of-use asset under a lease that qualifies as a finance lease because the lease contains a purchase option and the option is reasonably certain to be exercised, the amortization period used by the lessee must be a. The same period that was used by the lessor. b. The economic life of the asset at the time the lease agreement took effect. C. The term of the lease d. The term of the lease or the economic life of the asset, whichever is shorter. 4. If the lessee expects to obtain title to leased property due to a purchase option that is reasonably certain to be exercised or the passage of title at the end of the lease term: a. The lessee ignores any residual value for the leased property. b. The lessor ignores any residual value for the leased property C. The lessee adds the present value of the residual value to the amount recorded for the lease. d. The lessor will always charge a higher annual lease rate. 5. Red Co. recorded a right-of-use asset of $100,000 in a 10-year finance lease. Payments of $16,275 are made annually at the end of each year. The interest rate charged by the lessor was 10%. The balance in the lease payable after two years will be a. $80,000 b. $86,823 c. $116,309. d. $121,000 6. Lasch Co. recorded a right-of-use asset of $200,000 in a 10-year operating lease. Payments of $32,550 are made annually at the end of each year. The interest rate charged by the lessor was 10%. The balance in the right-of-use asset after the first year will be: a $180,000 b. $187.450 c. $188.450 d $200,000 7. If a pension plan is underfunded, the company has a net loss-OCI. True or False? True False