When a lease qualifies as a finance lease, what amount is initially recorded as the cost of the right-of-use asset? A) The present value of the lease payments B) The sum of the gross (undiscounted) lease payments. O A
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Solution
Concept
In case of finance lease , The initial cost of right of use asset include
Present value of lease liability |
ADD : direct costs |
ADD : estimated cost of dismantling |
ADD : prepaid lease payments |
LESS : lease incentives |
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- Owefix a. compute the amount of lease receiveable for the leaseb. discusd the bethre of the leasec. prepara an amoritization table for the lessee and lessorAssume that on December 31, 2019, Sage Hill Aerospace signs a 8-year, non-cancelable lease agreement to lease a hanger from Aero Field Management Company. The following information pertains to this lease agreement: The agreement requires equal rental payments of $161,234 beginning on December 31, 2019. The fair value of the building on December 31, 2019 is $1,092,423. The building has an estimated economic life of 10 years, a guaranteed residual value of $49,600, and an expected residual value of $34,500. Sage Hill depreciates similar buildings on the straight-line method. The lease is nonrenewable. At the termination of the lease, the building reverts to the lessor. 5. Sage Hill's incremental borrowing rate is 6% per year. The lessor's implicit rate is not known by Sage Hill. 1. 2. 3. 4. Click here to view factor tables. (For calculation purposes, use 5 decimal places as displayed in the factor table provided.)A(n) is a contract for the use of an asset for a period of time without having to buy the asset. Oa. indenture Ob. revenue option Oc. lease Od. depreciation hedge
- The following are some of the characteristics of an asset available for lease. (Click the icon to view the lease characteristics.) Required a. Determine the amount of lease payment that the lessor would require to lease the asset. b. Compute the lessor's net investment in the lease at initial recognition. c. Compute the value of the lessee's ROU asset at initial recognition. d. Compute the lessee's lease liability at initial recognition. Requirement a. Determine the amount of lease payment that the lessor would require to lease the asset. Begin by calculating the present value of the residual value and the value to be recovered by the lessor from the annual lease payments. (Use a financial calculator for all present value computations. Enter your final answers as positive amounts rounded to the nearest whole dollar.) Present value of guaranteed residual value Value to be recovered by annual lease payments Determine the amount of lease payment that the lessor would require to lease the…An amount paid by the lessee to the lessor in addition to the periodic rental which is treated by the lessor as an unearned rent income to be amortized over the lease term. a. Contingent rent b. Lease bonus c. Initial direct cost d. Security depositThe following are some of the characteristics of an asset available for lease. E (Click the icon to view the lease characteristics.) Required a. Determine the amount of lease payment that the lessor would require to lease the asset. b. Compute the lessor's net investment in the lease at initial recognition. Lease characteristics c. Compute the value of the lessee's ROU asset at initial recognition. d. Compute the lessee's lease liability at initial recognition. Fair value of leased asset $ 115,000 Lease term 7 years Payment frequency Annual Requirement a. Determine the amount of lease payment that the lessor would require to lease the asset. Payment timing Beginning of year Begin by calculating the present value of the residual value and the value to be recovered by the lessor from the annual lease payments. (Use the nearest whole dollar.) s rounded to Guaranteed residual value $ 19,000 Amount expected to be paid out under the guaranteed residual Present value of guaranteed residual…
- Part 1: New Lease Accounting – using IFRS 16 Leases Effect Analysis. Which payments are to be included in the measurement of lease assets and lease liabilities? Also, discuss the pros and cons of excluding the following payments from the measurement. - Variable lease payments linked to future use or sales - Optional payments relating to lease-extension option when a lessee is not reasonably certain to exercise the option.Which of the following is a TRUE statement? Oa The Lessee recognizes a single Lease Expense on the Income Statement for a Finance Type Lease. Ob Under an Operating Lease, the Lessor records each Lease Payment Receipt as part Interest Revenue and part Lease Revenue. Oc Under an Operating Lease, the Lessot reports a Lease Receivable Asset on their Balance Sheet equal to the presernt value of Lease payments plus the present value of a Rem d A Lessee reports Interest Expense on a Finance Lease but not on an Operating Lease. Oe. Both a Guaranteed and Unguaranteed Residual Value affect the Lessee's computation of amounts capitalized as a Leased AssetA lease agreement whereby the lessee recognized rent expense which is always equals to the rent income recognized by the lessor at a given period of time. A. Operating lease B. Finance lease C Terminating lease D. Sale type lease
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