Question

Office equipment recorded under a finance lease containing a bargain purchase option should be amortized under...

Office equipment recorded under a finance lease containing a bargain purchase option should be amortized under SFAS No. 13

A. Over the period of the lease using the interest method of amortization

B.Over the period of the lease using the straight-line method of amortization

C. In a manner consistent with the lessee's normal depreciation policy for owned assets

D.In a manner consistent with the lessee's normal depreciation policy for owned assets except that the period of amortization should be the lease term

Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Answer: Option C) In a manner consistent with the lessee's normal depreciation policy for owned assets

Explanation:

as per SFAS No. 13

- if the lease transfers ownership of the property to the lessee by the end of the lease term or

- the lease contains a bargain purchase option then;

the asset shall be amortized in a manner consistent with the lessee's normal depreciation policy for owned assets.

If the lease does not meet either criterion , the asset shall be amortized in a manner consistent with the lessee's normal depreciation policy except that the period of amortization shall be the lease term.

Thus, our answer is option C.

If helpful, Thumbs UP please:)

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Ajax Ltd. is the lessee under a finance lease with a provision to purchase the leased...
Ajax Ltd. is the lessee under a finance lease with a provision to purchase the leased asset at the end of the lease term for a bargain price. The depreciation (leased asset amortization) period used by the Ajax must be Question 8 options: the term of the lease. the useful life of the leased asset. whatever depreciation period the lessor was using. either the term of the lease or the useful life of the leased asset, whichever is shorter.
QUESTION 23 Pisa, Inc. leased equipment from Tower Company under a four-year lease requiring equal annual...
QUESTION 23 Pisa, Inc. leased equipment from Tower Company under a four-year lease requiring equal annual payments of $344,152, with the first payment due at the end of the first year. The lease does not transfer ownership, nor is there a bargain purchase option. The equipment has a 4-year useful life and no salvage value. Pisa, Inc.’s incremental borrowing rate is 10% and the rate implicit in the lease (which is not known by Pisa, Inc.) is 8%. Pisa, Inc....
1. On January 1, 2021, Oriole Corporation signed a 5-year noncancelable lease for equipment. The terms...
1. On January 1, 2021, Oriole Corporation signed a 5-year noncancelable lease for equipment. The terms of the lease called for Oriole to make annual payments of $191000 at the beginning of each year for 5 years beginning on January 1, 2021 with the title passing to Oriole at the end of this period. The equipment has an estimated useful life of 7 years and no salvage value. Oriole uses the straight-line method of depreciation for all of its fixed...
1The costs of issuing debt under GAAP require a*That the debit of the issuance costs be...
1The costs of issuing debt under GAAP require a*That the debit of the issuance costs be compensated with the debt to the lowest bonds b*The debit of issuance costs is offset against the debt to increase the bonds payable c*A debit to the debt issuance asset account which is amortized during the duration of the debt 2-GAAP requires that if the company chooses to report bonds at fair value they a*They must report the changes as the increase or decrease...
Property, plant and equipment are: Tangible assets used in the operation of a business having a...
Property, plant and equipment are: Tangible assets used in the operation of a business having a useful life of more than one accounting period. Current assets. Long-term investments. Intangible assets used in the operations of a business having a useful life of more than one accounting period. Tangible assets used in the operation of business having a useful life of less than one accounting period. The relevant factor(s) in calculating depreciation is (are): Cost. Residual value. Useful life. Both cost...
1-25 True or False 1. Sales revenue is an inflow of assets. 2. The three distinct...
1-25 True or False 1. Sales revenue is an inflow of assets. 2. The three distinct types of cost to a manufacturer are direct materials, direct labor, and manufacturing overhead.                       3. Sales Returns and Allowances is a contra-asset account. 4. Like sales revenue, cost of goods sold represents an inflow of assets. 5. With the periodic inventory system the inventory account is updated after each sale or purchase. 6. When merchandise is sold FOB shipping point, the buyer is responsible...
On 1 December 2013, John and Patty Driver formed a corporation called Susquehanna Equipment Rentals. The...
On 1 December 2013, John and Patty Driver formed a corporation called Susquehanna Equipment Rentals. The new corporation was able to begin operations immediately by purchasing the assets and taking over the location of Rent-It, an equipment rental company that was going out of business. The newly formed company uses the following accounts: ******USA FORMA******USA FORMAT******USA FORMA******USA FORMA******USA FORMA******USA FORMA****** Cash Share Capital Accounts Receivable Retained Earnings Prepaid Rent Dividends Unexpired Insurance Income Summary Office Supplies Rental Fees Earned Rental...
Please read the article and answear about questions. Determining the Value of the Business After you...
Please read the article and answear about questions. Determining the Value of the Business After you have completed a thorough and exacting investigation, you need to analyze all the infor- mation you have gathered. This is the time to consult with your business, financial, and legal advis- ers to arrive at an estimate of the value of the business. Outside advisers are impartial and are more likely to see the bad things about the business than are you. You should...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT