FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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- Which one of the following is an indicator that a lease is an operating lease for accounting purposes? Multiple Choice The lease transfers ownership of the asset to the lessee by the end of the lease term. The lessee will probably exercise the option to purchase the leased asset. The lease term represents a minor portion of the leased asset's economic life. The residual value plus the present value of the lease payments exceeds the value of the leased asset. The lessor has no use for the asset other than to lease it to the present lessee due to the specialized nature of that asset.arrow_forwardFor a lessor, the leased asset appears on the balance sheet and continues to be depreciatedwhen the lease is classifi ed as:A . a sales-type lease.B . an operating lease.C . a fi nancing lease.arrow_forwardA lease transfers the right to use an identified asset for a period of time in exchange for rental payments. True Falsearrow_forward
- Under ASC 842 If the present value of the lease payments is less than or equal to the fair value of the asset the lessor must classify the lease as a direct financing lease. True Falsearrow_forwardOutline the accounting procedures involved in applying the operating lease method by a lessee.arrow_forwardWhich of the following is /are usually correct regarding operating leases? I. The lessor will recoup the entire cost of the leased asset during the term of the original lease. II. The leases are fully amortized. III. The lessee has an obligation under the cancellation option to cancel the lease contract prior to the expiration date. IV. The lessor is responsible for insuring the leased asset. Select one: a. I and III only b. II, III, and IV only c. III and IV only d. IV onlyarrow_forward
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