1. Which of the following is true?
   1. In a direct financing lease the lessor is a dealer
   2. In a direct financing lease the lessor is a dealer and a financing entity
   3. In a sales type lease the lessor is a financing entity
   4. In a finance lease, the accounting for the lessee is the same whether it is direct finance lease or sales type lease
2. Which of the following not part of the Gross Investment?
   1. Gross Rentals
   2. Absolute Amount of Residual Value
   3. Absolute Amount of Purchase Option
   4. Present Value of Residual Value
3. Unearned Interest Income is?
   1. The Present Value of Gross Investment
   2. The Difference between Initial Direct Cost and Net Investment
   3. Finance Income that is recognized periodically
   4. Same as Gross Profit for Sales Type Lease
4. The Cost of Asset for lease is?
   1. Equal to the Gross Investment
   2. Equal to the Net Investment
   3. Equal to the Unearned Interest Income
   4. Equal to the Gross Rentals
5. Initial direct cost incurred by a lessor in an operating lease should be
   1. Added to the carrying amount of the leased asset and recognized as expense over the lease term on the same basis as lease income
   2. Expense immediately
   3. Capitalized as cost of the leased asset and depreciated over the life of the asset
   4. Capitalized as cost of the leased asset and depreciated over the lease term
6. Lease payments under an operating lease shall be recognized as expense using the
   1. Cash Method
   2. Sum of the years digit method
   3. Declining balance method
   4. Straight line method, unless another systematic basis representative of the time pattern of the users benefit
7. If entities want to disqualify a lease as a finance lease to the lessee, while having the same lease qualify as a finance lease to the lessor, which of the following statements is true?
   1. This cannot be done
   2. The entities must make information about the implicit rate unavailable to the lessee and use the incremental borrowing rate of the lease when it is higher than the implicit interest rate of the lessor
   3. The entities include a bargain purchase option
   4. The entities specify the transfer of the property to the lessee
8. Which of the following statement is incorrect about initial direct cost?
   1. Initial direct costs incurred by the lessee in finance lease are added to the amount recognized as an asset and to the finance lease liability
   2. In a direct financing lease, initial direct costs are added to the net investment in the lease
   3. In a sales type lease, initial direct costs are expensed in the year of incurrence
   4. For operating leases, initial direct costs are deferred and allocated over the lease term