Operating leases are not reflected on the balance sheet, but they are reflected on the income statement in the rent expense. Comment on why an interest expense figure that relates to long-term operating leases should be considered when determining a fixed charge coverage.
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Operating leases are not reflected on the balance sheet, but they are reflected on the income statement in the rent expense. Comment on why an interest expense figure that relates to long-term operating leases should be considered when determining a fixed charge coverage.
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- Payments on an operating lease will appear: A. In the profit and loss account as an expense B. In the balance sheet as a fixed asset. C. In the balance sheet as along as a long term creditor. D. In the profit and account as a non-trading revenue.Which of the following does not affect the computation of the rental income/expense under an operating lease? Contingent rent Lease bonus Security deposits Rental paymentsIn an operating lease, rent collected in advance by the lessor should be treated as? prepaid expense accrued liability accrued asset unearned income
- An Operating Lease will have which of these expenses (may have more than one answer)? Check All That Apply None of these Rental ExpenseRental Expense Depreciation ExpenseDepreciation Expense Interest Expense This question may have more than one answer,Which of the following statements is true about initial direct costs? A. Initial direct costs of a sales-type lease should be expensed at the commencement of the lease only if no selling profit or loss has been incurred. B. Initial direct costs are ownership-type costs such as insurance, maintenance, and taxes. C. Initial direct costs of an operating lease should be recorded by the lessor as a prepaid asset. D. Initial direct costs should always be debited against income by the lessor in the period of the inception of the lease.Lease payments under an operating lease shall be recognized as an expense in the income statement on? a diminishing balance basis cash basis a sum of units basis a straight line basis over the lease term unless another systematic basis provides more reliable financial information
- Which of the following accounts would not appear on the income statement of a lessee in connection with a finance lease? 0 A. Amortization expense B. Interest expense OC. Services expense for a nonlease component D. Rental expenseWhen a lessor receives cash on an operating lease, which of the following accounts is increased? A. Lease Payable B. Interest Revenue: Leases C. Lease Receivable D. Rent RevenueIn a financing lease, “front loading” of lease expense and lease revenue occurs. What does this mean, and how is it avoided in an operating lease?
- When a lessee makes periodic cash payments for a finance lease, which of the following accounts is decreased? A.Right-of-Use Asset B.Lease Rental Expense C.Interest Expense D.Lease LiabilityExplain the concept of accounting for leases and the criteria used to determine whether a lease should be classified as an operating lease or a finance lease. Discuss the implications of lease accounting on a company's financial position and performance.What type(s) of leases result in an asset and a liability on the balance sheet? Select one: A. Operating Leases * B. Finance Leases C. Both Operating and Finance Leases D. Neither Operating and Finance Leases