For which of the following conditions will the lessor classify a lease as a sales-type lease? a.The leased asset may be exchanged for a similar asset during the lease term. b.The present value of the sum of the lease payments is equal to or more than the fair value of the underlying asset. c.The lease term is less than one year. d.The lease term is half of the underlying asset’s economic life.

A lease is classified as financial because it meets the criteria that the term of the lease is more than 75% of the life of the leased asset. For how long should that asset be amortized? A) The term of the lease B) An average of the useful life and term of the lease C) It is not amortized because it is not the owner D) The useful life.

For each of the three independent situations below determine the amount of the annual lease payments. Each describes a finance lease in which annual lease payments are payable at the beginning of each year. Each lease agreement contains an option that permits the lessee to acquire the leased asset at an option price that is sufficiently lower than the expected fair value that the exercise of the option appears reasonably certain. (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.) Lease term (years) Lessor's rate of return Fair value of leased asset Lessor's cost of leased asset Purchase option: Exercise price Exercisable at end of year: Reasonably certain? Situation 1 Situation 2 Situation 3 1 Annual lease payments 4 10% $82,000 $61,000 Situation 2 4 11% $431,000 $431,000 $ 21,000 $ 61,000 4 4 yes no 3 3 9% $196,000 $156,000 Determine the annual lease payments for each situation: (Round your intermediate and final…

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A six-year lease can be renewed for two additional three-year periods, and it also can be terminated after only three years. How do the lessee and lessor decide the lease term to be used in accounting for the lease?

A lease that has a lease term (including any options to terminate or renew that are reasonably certain) of twelve months or less is considered a “short-term lease.” How does a lessee record a lease using the shortcut approach available as an option for short-term leases?

Which of the following is not one of the criteria for determining whether a lease is a finance lease?   A. The asset cost is greater than $100,000B. The lease grants the lessee an option to purchase the asset that the lessee is reasonably certain to exerciseC. The lease term is for the major part of the remaining economic life of the assetD. Alease that transdies ownership of the asset to the lessee by the end of the lease term

See attached picture   C) What expenses related to this lease will Evans incur during the first year of the lease, and how will they be determined?

Explain which of following would result in the lessee classifying the lease as a finance lease. a.    The lease is for a major part of the economic life of the asset. b.    The lease term is for 12 months or less. c.    The lease transfers ownership of the asset at the end of the lease.

How will a 20-year lease obligation appear on the lessee's statement of financial position? a.as a long-term liability, only if an operating lease b.as a long-term liability, only if a finance lease c.as a long-term liability for any lease, operating or finance d.as a long-term asset for an operating lease