e following statements relate to the impact on the financial statements for operating vs. finance leases. Indicate all statements that are correct lect one or more: a. The right of use asset is shown at a higher amount for a finance lease. b. The lease liability is measured as the present value of future cash flows for both operating and finance leases. c. Net Income is higher at first when a lease is classified as a finance lease. 0 d. Operating Income is lower when a lease is classified as an operating lease.

e following statements relate to the impact on the financial statements for operating vs. finance leases. Indicate all statements that are correct lect one or more: a. The right of use asset is shown at a higher amount for a finance lease. b. The lease liability is measured as the present value of future cash flows for both operating and finance leases. c. Net Income is higher at first when a lease is classified as a finance lease. 0 d. Operating Income is lower when a lease is classified as an operating lease.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Explain the difference in lessee income statement and balance sheet presentation for a finance versus an operating lease.
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When a lease qualifies as a finance lease, what amount is initially recorded as the cost of the right-of-use asset? A) The present value of the lease payments B) The sum of the gross (undiscounted) lease payments. O A O B « Previous Next Not saved Submit Quiz
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In accounting for a finance lease/ Sale-type lease, how are the lessee's and lessor's income statements affected?
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What is the difference between a "capital/financing lease" and an "operating lease"? Where on the various financial statements would we expect to find each of these leases reported?
2 Which statement is correct in comparing capital leases to operating leases? a) A capital lease will have a higher asset turnover compared to an operating lease. b) A capital lease will increase the return on total assets compared to an operating lease. c) A capital lease will have a lower debt-to-equity ratio compared to an operating lease. d) A capital lease will have a higher debt-to-equity ratio compared to an operating lease.
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Under the FASB old lease standard, when management of a company wishes to window-dress, they classify lease as a capital lease rather than operating lease to generally report: 1. Higher cash flow from operations and higher assets. 2. lower cash flow from operations and lower assets. 3. Identical cash flow from operations and the same amount of assets. 4. None of the above.