If the lessee and lessor use different interest rates to account for a finance/sales-type lease, then what is going wrong?

Q: What comprises a lessee’s minimum lease payments? What is excluded?

A: A lease is a contractual obligation under which one party (lessee) uses the assets or resources of…

Q: Describe and demonstrate how the lessee accounts for a finance lease and the lessor accounts for a…

A:

Q: leasing

A: Introduction: Leasing is defined as an agreement between two parties known as lessor & lessee…

Q: Why is the cost of financing with a sale-leaseback essentially the same as the return from…

A: Introduction: Financing costs are nothing but the interest and other costs that the company incurred…

Q: How does a leveraged lease differ from a nonleveraged lease?

A: A leveraged lease is an agreement that is partially financed by the third party creditor. In this…

Q: What is the concept of sale-leaseback agreement?

A:

Q: Why would a lease include a contingent payment provision? Explain.

A: Contingency payment provisions is a provision for a possible event or circumstance which is not…

Q: What is the difference between an “operating” and a “capital” lease? In easy terms please!

A: The criteria for defining the lease as a capital lease or operating lease   As per the notes issued…

Q: Why is it appropriate to compare the cost of lease financing with that of debtfinancing?

A: Cost of lease financing is the cost that is bear by the lessee who have owned the right from the…

Q: What do we mean by overage in a retail lease agreement? How might it be calculated?

A: Overage on retail lease contract and its computation as follows: Retail lease contracts show a least…

Q: When are initial direct costs recognized in an operating lease? In a sales-type lease with selling…

A: Initial direct cost paid by the lessee is added to the right-of-use asset. If incurred by the…

Q: What do you think is the main difference of accounting for lease on the part of the lessee and…

A: Lease is regarded as the contract between two parties those to use the asset of the owner by another…

Q: What is the difference between a tax-oriented lease and a nontax-oriented lease?

A: A tax-oriented lease: A tax-oriented lease, occasionally named a true lease, which offer the lessor…

Q: On January 21, the column totals of the payroll register for Great Products Company showed that its…

A: Journal entry: It is the activity of recording and summarizing business economic transaction in the…

Q: When can a lease create both an asset and a liability for the lessee?

A: Lease is an agreement between two persons in which one grants the right to another to use a…

Q: Which of the following typically represents an advantage of leasing over purchasing an asset with an…

A: When a fixed asset is needed by business, then it can purchase the asset or it can take that asset…

Q: ect the le

A: Introduction : In simple words, leasing refers to the phenomenon under which an one entity use the…

Q: Differentiate between an operating lease, acapital (or financial) lease, and a sale andleaseback…

A: Answer: The term operating lease would be significantly shorter than the rented asset’s life. And in…

Q: Would using a higher discount rate increase or decrease the amount of lease liability recorded?

A: Lease: A contractual agreement for an asset between two parties. The parties involved are lessee and…

Q: Why is lease financing sometimes referred to as off–balance sheetfinancing?

A: Lease is a type of an agreement that involves two parties i.e. owner (lessor) and lessee. In this…

Q: Why might refinancing be considered an alternative to a sale-leaseback?

A: Introduction: The given question is related to the concept of real estate finance and investments.…

Q: What is difference between lease method and installment method?

A: Lease:   It is an agreement between an owner of an asset (Lessor) and a tenant (lessee) where the…

Q: What are the types of agreement related to sale-leaseback agreement?

A: Sale and Leaseback Agreement is a kind of financial transaction. This is a situation that arises…

Q: What are the economic benefits of leasing vs ownership of assets?

A: MEANING:- Leasing of Assets - The leasing of assets refers when the owner gives the right to use…

Q: is the basic concept of “substance over form” influences lease accounting? Explain.

A: Lease:A lease is a contractual agreement whereby the right to use an asset for a particular period…

Q: What are the primary benefits to a lessor of entering into a lease arrangement

A: The primary benefits to a lessor of entering into a lease arrangement will be explained:

Q: What is meant by the term “off-balance sheet financing”? When do leases provide such financing and…

A: Financing in the normal course means the company has taken a loan from the investor when there is a…

Q: Which of the following is a test of control relating to purchases? a. None of the options b. Give…

A: Test of controls refers to the audit procedure followed by the auditors while conducting an audit of…

Q: What are the differences between a direct-financing and a sales-type lease for a lessor? Why would a…

A: First of all, let us understand the concepts of lessor and lessee. So essentially, a lessor is de…

Q: What are the disadvantages of lease?

A: Lease:   Lease is a contractual agreement whereby the right to use an asset for a particular…

Q: Explain Effective Cost of the Sale-Leaseback?

A: Sales leaseback is a type of financial transaction where the owner sold its property to the other…

Q: What is selling profit on a sales-type lease? How do we account for a sales-type lease with a…

A: Sales-type lease: Sales type lease in equivalent type of direct financing whereby the owner (lessor)…

Q: How do you think expense stops and CPI adjustments in leases affect the riskiness of the lease from…

A: INTRODUCTIONLease is a contract in which the right to use the asset is given by the lessor to the…

Q: Can the present value of minimum lease payments differ between the lessor and lessee? If so, how?

A: Leases: Lease is a contractual agreement whereby the right to use an asset for a particular period…

Q: What is meant by Non-Cancellable lease?

A: Lease: It is an agreement between two parties in which one party agrees to give an asset on lease…

Q: Briefly explain two disadvantages of sale and leaseback transactions

A: In a sale and leaseback, a business sells a structure that it both owns and occupies while also…

Q: How does Lease payments often are lower than installment payments?

A: Definition: Lease: Lease is a contractual agreement whereby the right to use an asset for a…

Q: How does the analysis of a sale-leaseback differ from the analysis of owning versus leasing?

A: A sale lease back is very beneficial for the company because it helps the company to sell the asset…

Q: Under a sales-type lease without an operating profit, how is the lessor's cost (1.e., the initial…

A: Solution:- Definition :-  It is a lease, which transfers substantially all the risk and rewards…

Q: Why does a finance lease is economically similar to a purchase of the asset?

A: There are many similarities between purchase of a asset and Finance lease, such as: In a finance…

Q: What factors would tend to affect the value of a lease?

A: Lease is a contract between two parties in which one party lends its property or asset to the other…

Leasing

Leasing is a contractual arrangement in which someone (a lessee) pays the owner (or lessor) of a building, land, vehicle, or other asset for the use of that asset. The lease is the agreement between lessee and lessor.