When a company sells property and then leases it back, any gain on the sale should usually be Select one: a. recognized in the current year. b. recognized at the end of the lease. c. deferred and recognized as income over the term of the lease. d. recognized as a prior period adjustment.
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9.When a company sells property and then leases it back, any gain on the sale should usually be
Select one:
a.
recognized in the current year.
b.
recognized at the end of the lease.
c.
deferred and recognized as income over the term of the lease.
d.
recognized as a prior period adjustment.
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- * Your answer is incorrect. When a company sells property and then leases it back, any gain on the sale should usually be deferred and recognized as income over the term of the lease. O recognized at the end of the lease. Orecognized in the current year. O recognized as a prior period adjustment.A(n) is a contract for the use of an asset for a period of time without having to buy the asset. Oa. indenture Ob. revenue option Oc. lease Od. depreciation hedgeWhat is the proper accounting treatment to record improvements to leased property for a lessee? Group of answer choices Capitalize and depreciate over the lesser of the life of the improvement or lease term. Expense in the year in which expenses are incurred. Expense in the year in which expenses are incurred and increase basis of asset. Capitalize and depreciate over the greater of the life of the improvement or lease term.
- 1. At the beginning of the lease term, what amount should be recorded as cost of right of use asset? 2. What is the depreciation of the right of use asset for the current year?9. Baa Co. enters into a lease of commercial space. The contract specifies a non-cancellable term of five years and a two-year, market-priced commencement, Baa Co. makes significant leasehold improvements with a useful life of ten years. Baa Co. determines that the economic benefits of the leasehold renewal option. Before the lease improvements can only be realized through continued of the leased property. At lease commencement, Occupancy b. 5 years c. 7 years d. 10 years a. 2 years Which of the following statements is incorrect regarding the accounting for lease liabilities? Lease liabilities are subsequently measured at amortized cost, adjusted for lease modifications and reassessments. b. Subsequent lease payments are apportioned to both the interest and the principal balance of the lease liability. c Periodic interests reflect a varying rate of interest on the remaining balance of the lease liability. d. Periodic interests reflect a constant rate of interest on the remaining…Statement 1: The right-of-use asset is required to be presented at net amount on the face of the statement of financial position at the end of each reporting period.Statement 2: The right-of-use asset shall be depreciated using its estimated useful life regardless of whether there is certainty or not that the underlying asset will be transferred to the lessee at the end of lease term. Both statements are correct Only statement 2 is correct Both statements are incorrect. Only statement 1 is correct
- 1. In a sale and leaseback transaction, what is used by the buyer-lessor to depreciate the cost of the leased asset? A. Lease term B. Total Useful life C. Excess of useful life over the lease term D. Remaining useful life 2. Which of the following scenarios regarding a sale and leaseback transaction would result to a loss to the seller-lessee? A. Fair Value < Carrying Amount B. Sale Price < Fair Value C.Sale Price > Fair Value D.Fair Value > Carrying Amount 3. When does a buyer-lessor recognize a financial asset from a sale and leaseback transaction? A. Sale Price > Fair Value B. Fair Value < Carrying Amount C. Sale Price < Fair Value D. Fair Value > Carrying AmountIn an operating lease that is recorded by the lessee, the equal monthly rental payments shall be? recorded as a reduction in the liability for leased asset allocated between a reduction in the liability for leased asset and depreciation expense recorded as rental expense allocated between a reduction in the liability for leased asset and interest expenseWhen a lease modification results in partial termination of a lease, the change shall be accounted for as any of the following except: A. The increase in lease liability as a result of the lease modification is accounted for as an adjustment to the carrying amount of the right of use asset. B. The excess of the decrease in carrying amount of lease liability over the decrease in the carrying amount of the right of use asset is accounted for as a termination gain. C. The excess of the decrease in carrying amount of right of use asset over the decrease in the carrying amount of the lease liability is accounted for as a termination loss. D. The increase (decrease) in lease liability as a result of the lease modification is accounted for as termination loss (gain).
- For a lease that transfers ownership of the property to the lessee by the end of the lease term, the lessee should: a.amortize the right-of-use asset over the economic life of the asset in a manner consistent with the lessee's normal depreciation policy for owned assets b.amortize the right-of-use asset over the lease term in a manner consistent with the lessee's normal depreciation policy for owned assets c.record each lease payment as lease expense d.combine interest expense and amortization expense and report as a single lease expenseIn a sale-leaseback transaction, the right-of-use asset is computed as: a. Rights retained by the lessor multiplied by rights retained by the lessee divided by FV of the asset. b. Carrying value of the asset multiplied by the FV of rights retained by the lessee divided by fair value of the asset. c. Lease liability multiplied by useful life divided by total fair value of the asset. d. FV of rights retained by the lessee multiplied FV of the asset divided by carrying value of the asset.Generally accepted accounting principles require that certain leaseagreements be accounted for as purchases. The theoretical basis for thistreatment is that a lease of this type A. Effectively conveys all of the benefits and risks incident to the ownership of property B. Is an example of form over substance C. Provides the use of the leased asset to the lessee for a limited period of time D. Must be recorded in accordance with the concept of cause and effect
