Question

If the leaseback portion of a sale-leaseback transaction meets the criteria to be a finance lease:...

If the leaseback portion of a sale-leaseback transaction meets the criteria to be a finance lease:

Multiple Choice

The seller-lessee will record a right-of-use asset.

The seller-lessee will record interest revenue.

The seller-lessee will record a gain or loss on the sale of an asset.

The seller-lessee will record a note payable.

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Homework Answers

Answer #1

Correct answer is D -seller lesse will record note payable.

Since it is a financial lease where seller becomes lesse and purchaser lessor

Seller lesse has to pay lease payments over a period of time which will be recorded as note payable.

However seller assesee cannot immediately record gain/loss on sale of asset in case of financial lease. Nd right to use is recorded in case of operating lease .

So the correct answer is D.

Do give your feedback!! Happy Learning :)

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