Question 12 What was the primary accounting issue for lessees that lead to the issuance of ASU 2016-02?

A. Recording interest expense on the lease obligation.

B. Determining whether the lease meets the 90% of fair value test.

C. Off-balance sheet financing.

D. The measurement of the leased asset under a finance lease.

Question 13

When does the lessee report executory costs as an expense?

A.When they are spelled out in the lease agreement.

B. Only when they are incurred by the lessee and the lease is classified as a finance lease.

C.When they are incurred by the lessee.

D. Only when they are incurred by the lessee and the lease is classified as an operating lease.

Question 14

The appropriate valuation of an operating lease on the statement of financial position of a lessee is

A.Zero

B.The absolute sum of the lease payments

C. The present value of the sum of the lease payments discounted at an appropriate rate.

D. The book value of the asset on the lessor's books at the date of the inception of the lease