Question

In a finance lease: Multiple Choice the lessee records an asset and a liability for the...

In a finance lease:

Multiple Choice

  • the lessee records an asset and a liability for the present value of lease payments.

  • the lessor records an asset and a liability for the present value of lease payments.

  • the lessee records an asset and a liability for the total of the lease payments.

  • the lessor records an asset and a liability for the total of the lease payments.

Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

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
Exercise 15-10 (Algo) Lessor calculation of annual lease payments; lessee calculation of asset and liability [LO15-2]...
Exercise 15-10 (Algo) Lessor calculation of annual lease payments; lessee calculation of asset and liability [LO15-2] Each of the three independent situations below describes a finance lease in which annual lease payments are payable at the end of each year. The lessee is aware of the lessor’s implicit rate of return. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Situation 1 2...
The amount to be recorded as the cost of an asset under a finance lease is...
The amount to be recorded as the cost of an asset under a finance lease is equal to the A. present value of the lease payments or the fair value of the asset, whichever is lower. B. present value of the lease payments. C. carrying value of the asset on the lessor's books. D. present value of the lease payments plus the present value of any unguaranteed residual value. From the lessee’s perspective, in the earlier years of a lease,...
Host Co as a lessee records a finance lease of machinery on 1/1/19. The 7 annual...
Host Co as a lessee records a finance lease of machinery on 1/1/19. The 7 annual lease payments of $210,000 are made at the end of each year. The present value of the lease payments at 10% is $1,022,400. Prepare a lease amortization schedule from 1/1/19 to 12/31/21. Prepare the journal entries for Host from 1/1/19 to 12/31/20. SHOW ALL COMPUTATIONS.
Burns, Inc. (lessor) agreed to lease a delivery van to Wilmore Corp. (lessee). The lease was...
Burns, Inc. (lessor) agreed to lease a delivery van to Wilmore Corp. (lessee). The lease was classified as a finance/sales-type lease, but the van will be turned back over to Burns at the end of six years. Which of the following is true regarding the proper treatment of the delivery van’s estimated residual value? Multiple Choice Estimated residual values are ignored by both parties when initially recording a lease. In calculating the required lease payments, Burns will consider the estimated...
Recording Finance Lease Journal Entries— Purchase Option Lessee Company enters into a 6-year finance lease of...
Recording Finance Lease Journal Entries— Purchase Option Lessee Company enters into a 6-year finance lease of non-specialized equipment with Lessor Company on January 1, 2020. Lessee has agreed to pay $28,000 annually beginning immediately on January 1, 2020. The lease includes an option for the lessee to purchase the equipment at $3,000, which is $2,000 below the estimated fair value at lease end. Lessee Company is reasonably certain that it will exercise the purchase option. The economic life of the...
1. The methods of accounting for a lease by a lessee are a. operating and sales-type...
1. The methods of accounting for a lease by a lessee are a. operating and sales-type lease methods. b. operating and finance lease methods. c. operating and direct financing lease methods. d. none of these answers are correct.     2.     In computing the present value of the lease payments, the lessee should a.   use its incremental borrowing rate in all cases. b.   use both its incremental borrowing rate and the implicit rate of the lessor, assuming that the implicit rate...
The appropriate initial asset value reported in the balance sheet by the lessee for a long-term...
The appropriate initial asset value reported in the balance sheet by the lessee for a long-term operating lease is: a. Present value of the minimum lease payments. b. Sum of the minimum lease payments. c. Fair value of the asset at the inception of the lease. d. Zero, unless a prepayment or accrual is involved. The appropriate initial asset value reported in the balance sheet by the lessee for a long-term finance lease is: a. Present value of the minimum...
Barry Limited (lessee) entered into a finance lease agreement with the following terms: lease term is...
Barry Limited (lessee) entered into a finance lease agreement with the following terms: lease term is 4 years estimated economic life of the leased asset (equipment) is 5 years Right of use asset amount at the inception was $85,695 Annual lease payments of $30,000 each payable in advance. residual value at the end of the lease term is $5,000 but no amount was guaranteed by the lessee Which one of the following is correct for Barry Limited? Select one: Depreciation...
Each of the three independent situations below describes a finance lease in which annual lease payments...
Each of the three independent situations below describes a finance lease in which annual lease payments are payable at the end of each year. The lessee is aware of the lessor’s implicit rate of return. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Situation 1 2 3 Lease term (years) 10 15 5 Lessor's rate of return (known by lessee) 12% 10%...
Which of the following is not true for a finance lease? A The lease agreement has...
Which of the following is not true for a finance lease? A The lease agreement has a primary period which covers all or most of the useful economic life of the asset. B The lessee is normally responsible for servicing and maintenance of the asset. C The lease payments will appear in the profit and loss account as an expense. D The lessee records the leased asset as a fixed asset in its balance sheet.
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT