Question

1. How does a bargain purchase option affect the calculation of the lease payments charged by the lessor? (IO 22)

   		The option will increase the amount of the lease payments.
   		The option will decrease the amount of the lease payments.
   		No impact. The option is only part of the final entry.
   		There is not enough information provided to determine the effect of the option.

5 points   

QUESTION 12

1. (5 points) Which of the following pieces of information would NOT required for a LESSOR to complete its lease amortization schedule? (IO 20)

   		The value of a guaranteed residual
   		The direct costs for creating the lease
   		The lessor's interest rate for the lease
   		The lessor needs all of this information

5 points   

QUESTION 13

1. (5 points) Which of the following would be capitalized as the cost of a Right of Use Asset by a lessee if the lease is classified as a finance lease? (IO 20 & 21)

   		present value of the lease payments or the fair value of the asset, whichever is smaller
   		present value of both the lease payments plus and an unguaranteed residual value
   		present value of the lease payments
   		lessor's carrying value of the asset

Answer 1

How does a bargain purchase option affect the calculation of the lease payments charged by the lessor?

Answer: No impact. The option is only part of the final entry

Explaination: There is no impact as the option does not enter into the transaction until the end of the lease term.

Which of the following pieces of information would NOT required for a LESSOR to complete its lease amortization schedule

Answer: The lessor needs all of this information :

Explaination: the lessor needs value of a guaranteed residual, direct costs for creating the lease and lessor's interest rate for the lease

Which of the following would be capitalized as the cost of a Right of Use Asset by a lessee if the lease is classified as a finance lease?

Answer: present value of the lease payments