Question
The period covered by the termination option is added to the lease term in the following scenarios, except: A. Both the lessee and the lessor
The period covered by the termination option is added to the lease term in the following scenarios, except:
A. Both the lessee and the lessor has the right to terminate the lease, only the lesse has significant penalties in relation to the termination
B. Only the lessor has the right to terminate the lease
C. Both the lessee and the lessor has the right to terminate the lease. Both of them have no significant penalties to terminate
D. The lessee has the right to terminate the lease, but is not reasonably certain that it will exercise the right.
Under sales type lease, if the residual value is GUARANTEED:
A. it is NOT discounted but INCLUDED as part of Cost of Goods Sold
B. It is IGNORED and NOT included in the computation of the lease receivable
C. It is discounted and INCLUDED in as part of sales.
D. It is INCLUDED in the measurement of the NET INVESTMENT
if the lessee guaranteed the residual value at the end of the lease term, it will:
A. Recognize a loss on lease if the fair vale at the end is equal to the guaranteed residual value
B. Recognize a loss on lease if the fair value at the end is greater than the guaranteed residual value
C. Will simply debit the remaining leases if guaranteed residual value is equal to the fair value at the end of the lease
D. Debit cash if the fair value at the end is less than the guaranteed residual value, equal to the difference in fair value and the guaranteed residual value.
When there are lease modifications pertaining to increases in scope of an asset, this would be accounted for as a separate lease if:
A. There is an increase in consideration
B. There is an additional asset and increase in consideration commensurate with the LESSEE'S stand alone rent
C. There is an additional asset and increase in consideration
D. There is an additional asset and increase in consideration commensurate with the LESSOR'S stand alone rent
initial direct costs of a SALES TYPE LEASE is recognized as:
A. Included in the measurement of the finance lease receivable
B. Expense in the selling, general and administrative costs of the income statement
C. Part of the cost of goods sold
D. Inclded in the cost of the asset and amortized over the lease term
When accounting for direct finance leases, which of the following is true:
A. We recognize a profit on the difference in the fair value of the leased asset and the cost of the leased asset.
B. When we discount using the implicit interest rate, the initial direct cost is not yet included in the net investment
C. The fair value of the leased asset = cost of the leased asset
D. The fair value of the leased asset is not equal to the cost of the leased asset
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