The profit on a finance lease transaction for lessors who are manufacturers or dealers should A. Not be recognized separately from finance income B. Be recognized in the normal way on the transaction C. Only be recognized at the end of the lease term D. Be allowed on a straight-line basis over the life of the lease
Q: Which of the following is not included in the lease payments for the purpose of computing the lease…
A: This question deals with the IFRS 16 "Leases". When lessee lease the asset from the lessor then…
Q: ndicate all statements that are correct. Select one or more: a. Net Income is higher at first…
A: The lease system is type of arrangement in which right to use of the assets is given by payment of…
Q: 1. In a lease that is recorded as a manufacturer's lease or dealer's lease by the lessor, interest…
A: “Since you have asked multiple question, we will solve the first question for you. If you want any…
Q: Answer True or False Initial direct costs are immediately recognized as an expense by the lessor…
A: Per Per PFRS 16 Inidial direct cost are the incremental cost of obtaining a lease that would not…
Q: 1. In a lease that is recorded as a manufacturer's lease or dealer's lease by the lessor, interest…
A: A lessor's interest income is the difference between the sum of the total rentals due to the lessor…
Q: Initial direct costs incurred by the lessor in connection with specific leasing activities as in…
A: Solution: Initial direct costs incurred by the lessor in connection with specific leasing activities…
Q: 1. Which statement is incorrect about initial direct costs? a. Initial direct costs incurred by the…
A: Initial direct costs are incremental cost of a lease that would not have been incurred if lease has…
Q: Under IFRS: lessees may use alternative measurement bases (e.g., revaluation accounting) for the…
A: Lease: Lease is a contractual agreement whereby the right to use an asset for a particular period of…
Q: Answer True or False Both finance and operating leases are subject to capitalization.
A: Finance Lease : lease where substantially all risk and rewards incidental to the ownership of the…
Q: When a lessor receives cash on a sales-type lease, which of the following accounts is decreased? A.…
A: PLEASE LIKE THE ANSWER, YOUR RESPONSE MATTERS When a lessor receives cash on a sales-type lease,…
Q: The rent expense of the lessee maybe composed of the following: I. Straight-line amortization…
A: Rent expense is a type of fixed operating cost or an absorption cost for a business, as opposed to a…
Q: Compared to using a fi nance lease, a lessee that makes use of an operating lease will mostlikely…
A: Lease: Lease is a contractual agreement whereby the right to use an asset for a particular period of…
Q: nitial direct costs are immediately recognized as an expense by the lessor when the cost incurred in…
A: Lease agreement is the agreement in which a person acquires the right to use the asset of other at a…
Q: Which of the following statements is characteristic of leases? a.If a lease is classified as an…
A: LEASES ARE CONTRACT IN WHICH PROPERTY OR THE ASSET OWNER ALLOWS ANOTHER PERSON TO USE THE PROPERTY…
Q: The rent expense of the lessee maybe composed of the following: I. Straight-line amortization…
A: Lease rent are the payment to the lessor against the right to use the asset of the lessor by the…
Q: The residual value is the estimated fair value of the leased property at the end of the lease term.…
A: Finance lease is also known as capital lease.This is a long term lease agreement in which the lessee…
Q: Which type of lease will not increase a company’s assets or long-term liabilities?a. A one-year…
A: Lease: Lease is a contractual agreement whereby the right to use an asset for a particular period…
Q: a lease that is recorded as a manufacturer's lease or dealer's lease by the lessor, interest revenue…
A: Step 1 Vendor records are lease records (credit) and the corresponding debit of cash or rent…
Q: Oa The Lessee recognizes a single Lease Expense on the Income Statement for a Finance Type Lease. Ob…
A: The answer for the true or false questions and relevant explanation are presented hereunder :…
Q: Lease payments under an operating lease shall be recognized as an expense in the income statement…
A: As per IAS 17 Lease payments under an operating lease shall be recognized as an expense in the…
Q: The appropriate valuation of an operating lease on the statement of financial position of a lessee…
A: Lease: It can be defined as a contractual agreement where one party known as lessor grants the right…
Q: Which one of the following definitions is/are correct? I. A lease between a lessor and the…
A: 1) Incorrect: Direct lease is the lease between manufacture or dealer(which is lessor) and user…
Q: e following statements relate to the impact on the financial statements for operating vs. finance…
A: Lease- Lease agreements are contracts or instruments that transfer property from one person to…
Q: 9. Which of the following statements is not true. (A) Capitalized leases should be reported on the…
A: A lease is a contract between a property owner and someone who wishes to use their asset. In a lease…
Q: initial direct costs incurred in relation to a lease transaction is added to A)the cost of sales…
A: In lease accounting the initial costs directly incurred in a lease transaction are to be considered…
Q: Which of the following is not one of the procedures for accounting by the lessee for a decrease in…
A: procedures for accounting by the lessee for a decrease in lease scope::: Decrease in the right of…
Q: The difference of gross investment in the lease and net investment in the lease of the lessor is?…
A: Solution: Gross investment in lease: The sum of 1. The lease payments receivable by a lessor under a…
Q: The basic difference between a direct-financing lease and a sales-type lease is the recognition of…
A: A direct financing lease is a type of lease under which the lessor purchases the asset and lease it…
Q: In a lease that is not assified as a manufacturer's ase, initial direct cost is * a. added to the…
A: Solution: In a lease that is not classified as a manufacturer's lease, initial direct cost is "added…
Q: TRUE OR FALSE: in a sales type lease the net investment in the lease is credited to the appropriate…
A: Lease is a financial transaction where one party, the lessor leases his asset to another party…
Q: he lessor recognizes a loss on finance lease when the fair value of the leased asset is _______ than…
A: Solution: The lessor recognizes a loss on finance lease when the fair value of the leased asset is…
Q: Which of the following statements characterizes a sales-type lease? A)The lessor recognizes only…
A: SOLUTION- SALES TYPE LEASE IS A FINANCE LEASE IN WHICH THE FAIR MARKET VALUE (OR IF LOWER , THE PV…
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: A lease that involves a manufacturer’s or dealer’s profit is a(an):(a) direct financing lease.(b)…
A: Lease: Lease is a contractual agreement whereby the right to use an asset for a particular period of…
Q: .The initial direct costs of leasing * , O All of these answers are true with regard to the initial…
A: Initial direct cost of leasing:- It is the cost which is generally incurred by the lessor in…
Q: For a finance lease, the lease obligation of the lessee would be reduced periodically by a. the…
A: Solution: For a finance lease, the lease obligation of the lessee would be reduced periodically by…
Q: Net investment in a sales-type lease is equal to
A: Net investment in sales type lease is recognized by lessor as amount of lease receivable. Option (a)…
Q: On the lessor's accounting, which of the following situations would prima facie lead to a lease…
A: On the lessor’s accounting, following situations would prima facie lead to a lease contract being…
Q: Which type of lease will not increase a company’s assets or long-term liabilities? Select one: a. A…
A: Lease means giving out the assets by lessor to lessee to use that assets in return of rent.…
Q: . The primary difference between a direct-financing lease and a sales-type lease is the amount of…
A: Lease is a contract or agreement between two parties in which one party provides it's asset for use…
Q: The rent expense of the lessee maybe composed of the following: I. Straight-line amortization…
A: Here discuss about the details of rent expenses which are incurred at the time of inception of lease…
Q: Which of the following statements is false regarding the accounting for leases? The lessor may not…
A: From the above options, the fourth option is false: 'A lessor included a rent collected in advance…
Q: Initial direct costs incurred by the lessor under a sales-type lease should be a. Deferred and…
A: Initial direct cost refers to the cost that Related directly with the completing a lease…
Q: The initial direct costs incurred in relation to a lease transaction is added to get the right of…
A: The initial direct costs incurred in relation to a lease transaction is added to get the right of…
Q: Which of the following statements is false regarding the accounting for leases? The amount of lease…
A: A lease rental collected in Advance is treated as Rent Advance and is included in the Non current…
The profit on a finance lease transaction for lessors who are manufacturers
or dealers should
A. Not be recognized separately from finance income
B. Be recognized in the normal way on the transaction
C. Only be recognized at the end of the lease term
D. Be allowed on a straight-line basis over the life of the lease
Step by step
Solved in 2 steps
- When a lessor receives cash on a sales-type lease, which of the following accounts is decreased? A. Lease Receivable B. Interest Revenue: Leases C. Unearned Interest: Leases D. Lease Rental RevenuePayments 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 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.
- Which of the following statements characterizes a sales-type lease? A)The lessor recognizes only interest revenue over the life of the asset.. B)The lessor recognizes only interest revenue over the lease term. C)The lessor recognizes a dealer profit at lease inception and interest revenue over the lease term. D)The lessor recognizes a dealer profit at lease inception and interest revenue over the useful life.Which of the following statements characterizes a sales-type lease? The lessor recognizes only interest revenue over the life of the asset.. The lessor recognizes a dealer profit at lease inception and interest revenue over the lease term. The lessor recognizes a dealer profit at lease inception and interest revenue over the useful life. The lessor recognizes only interest revenue over the lease term.If a sale and leaseback transaction results in a finance lease, any excess of sale proceeds over the carrying amount shall beI. Recognized immediately as income by the seller-lessee.II. Deferred and amortized as income by the seller-lessee over the lease term. Either I or II II only I only Neither I nor II
- 1. In a lease that is recorded as a manufacturer's lease or dealer's lease by the lessor, interest revenue a. should be recognized in full as revenue at the lease's inception. b. should be recognized over the O period of the lease using the straight-line method. C. should be recognized over the period of the lease using the interest method. d. does not arise. 2. In a lease that is not classified as a manufacturer's lease, initial direct cost is * a. added to the cost of the asset to get the gross investment in the lease. b. added to the cost of the liability to get the net investment in the lease. c. added to the cost of the liability to get the gross investment in the lease. d. added to the cost of the asset to get the net investment in the lease.Answer True or False Initial direct costs are immediately recognized as an expense by the lessor when the cost incurred in conjunction with an operating lease. Both finance and operating leases are subject to capitalization. Under an operating lease, the lease bonus paid by the lessee to the lessor and amortized over the lease term as a reduction to lease income. When rental payments vary over the term of the operating lease, the lessor should recognize lease income on a straight-line basis, unless there is another method that is more appropriate Initial direct costs are immediately recognized as an expense by the lessor when the cost incurred in conjunction with an operating lease. The lessor uses the implicit interest rate in determining the present value of the lease payments Termination penalties are included in the lease payments if the lease term reflects the lessee exercising an option to terminate the lease. In a sale and leaseback transaction that qualifies as a sale under…For a(n) ________ lease, a lessor recognizes revenue on the sale and records the asset, ________ lease. It also removes the leased asset from its accounts and records the ________. Group of answer choices sales-type; net investment in lease–sales-type; cost of goods sold finance; gross investment in lease–sales-type; cost of goods sold operating; net investment in lease–sales-type; cost of goods sold sales-type; finance; revenue
- An increase in interest income recognized for the period on a lease agreement will have the effect of reducing the unearned revenue account for the lessor. Select one: True FalseThe rent expense of the lessee maybe composed of the following:I. Straight-line amortization of total rental payments over the lease term plus any free rent.II. Straight-line amortization of lease bonus paid by the lessee at inception of the lease.III. Any contingent rent accrued to the lessor as part of lease agreement. A. I and III only B. I, II, and III C. II and III only D. I and II onlyAnswer True or False Initial direct costs are immediately recognized as an expense by the lessor when the cost incurred in conjunction with an operating lease. The lessor uses the implicit interest rate in determining the present value of the lease payments Termination penalties are included in the lease payments if the lease term reflects the lessee exercising an option to terminate the lease. In a sale and leaseback transaction that qualifies as a sale under PFRS 16, the seller-lessee recognized only the amount of any gain or loss that relates to the rights transferred to the buyer-lessor