1-

On 1/31/Y5, Zeus Company leased a new machine from Thor Corp. The following data relate to the lease transaction at its inception:

Lease term	5 years
Annual rental payable at beginning of each lease year	$30,000
Useful life of machine	10 years
Implicit interest rate	8%
Present value of an annuity of 1 in advance for 5 periods at 8%	4.3121
Present value of annuity of 1 in arrears for 5 periods at 8%	3.9927
Fair value of the machine	$200,000

The lease has no renewal option, the possession of the machine reverts to Thor when the lease terminates, and the machine does have alternative uses. The first lease payment of $30,000 is paid at the inception of the lease. What is the amount of lease liability recorded by Zeus at the inception of the lease?

Group of answer choices

$200,000

$129,363

$119,789

$0, because it does not meet the lease criteria for a finance lease.

2-

Alia Company leased an asset to Lion Company and appropriately accounted for the lease as a direct financing lease. The asset has a fair value of $36,000 and a carrying amount of $30,000. The lease has an implicit rate of 6% and a thirdparty guaranteed residual value of $5,000. The lease term is three years, and the asset has a fiveyear useful life. The present value of a single sum at 6% and three years is .83962. What amount of deferred gross profit should Alia record at the inception of the lease?

Group of answer choices

$4,198

$5,000

$6,000

$11,000

3-

In accordance with GASB 35, a public college or university that chooses to report only businesstype activities should present only the financial statements required for

Group of answer choices

Enterprise funds.

Government funds.

Internal service funds.

Enterprise and internal service funds.

4-

Direct financing leases typically have a

Group of answer choices

Bargain purchase option.

Residual value guaranteed by a thirdparty.

Residual value guaranteed by the lessee.

Option to renew the lease at a bargain price.

5-

Nongovernmental notforprofit organizations are required to report their financial statements on

Group of answer choices

A current financial resources measurement focus.

An economic resources measurement focus.

A cash measurement focus.

None of the above.

6-

Which of the following has the highest level of authority for setting GAAP for nongovernmental notforprofit organizations?

Group of answer choices

GASB

FASB

FASAB

AICPA

7-

Louie the lessee leased an asset for a threeyear lease term. Louie appropriately accounted for the lease as a finance lease and recorded a rightofuse asset for $45,000. The asset has a useful life of four years. How much amortization expense should Louie record each year?

Group of answer choices

$15,000

$11,250

$0, for a finance lease, the lessor will record amortization expense for the rightofuse asset

$0, Louie will record depreciation expense, not amortization expense.