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Usually ground leases are for relatively short periods of time. True or False True False
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- Compare the benefits and drawbacks to long-term vs. short-term leases from EITHER the point of view of the lessor or the lessee. REAL ESTATE FINANCEA lease transfers the right to use an identified asset for a period of time in exchange for rental payments. True FalseAn 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 False
- TRUE OR FALSE: in a sales type lease the net investment in the lease is credited to the appropriate asset account. If false, why?See attached picture A) What is the theoretical basis for the accounting standard that requires certain long-term leases to be capitalized by the lessee? Do not discuss the specific criteria for classifying a specific lease as a capital lease.True or False Lease payments are paid by the lessor.
- Why the lease is considered a “short-term lease”?Which of the following statements is most CORRECT? Oa. A key difference between a capital lease and an operating lease is that with a capital lease, the lease payments provide the lessor with a return of the funds invested in the asset plus a return on the invested funds, whereas with an operating lease the lessor depends on the residual value to realize a full return of and on the investment. Ob. Finance leases usually have a cancelation feature. Oc. Capital, or financial, leases generally provide for maintenance by the lessor. Od. Capitalizing a lease means that the firm issues equity capital in proportion to its current capital structure, in an amount sufficient to support the lease payment obligation. Oe. The fixed charges associated with a lease can be as high as, but never greater than, the fixed payments associated with a loan.We classify a lease as a finance lease if: Multiple Choice the present value of lease payments is less than the asset's book value. the present value of lease payments is less than the asset's fair value. the lessee obtains control of the use of the asset. the usual risks and rewards are retained by the lessor.