Question 1

Which statement is correct respecting the criteria for determining whether a lease is an operating or a finance lease?

Accepted Answer

A)  Substantially all of the risks and rewards of ownership have been transferred from the lessee to the lessor. 
B)  There is a transfer of ownership to the lessee or a bargain purchase option (BPO) at the end of the lease. 
C)  The lease term is a minor part of the economic life of the asset. 
D)  The present value of the minimum lease payments comprises substantially 50% fair value of the leased asset. 
A)  Substantially all of the risks and rewards of ownership have been transferred from the lessee to the lessor. 
B)  There is a transfer of ownership to the lessee or a bargain purchase option (BPO) at the end of the lease. 
C)  The lease term is a minor part of the economic life of the asset. 
D)  The present value of the minimum lease payments comprises substantially 50% fair value of the leased asset.

Question 2

Chambers leased equipment to Montga Company on November 1,2016.The terms of the lease are as follows:
   Montga uses straight-line depreciation for its property,plant,and equipment.
Required:
a.Prepare the journal entries for the lease from November 1 through December 31,2016.
b.You and the director of finance for Montga Company.You are concerned about the impact the lease will have on your key performance indicator,the total debt to total assets ratio.Discuss the impact the lease will have on this performance indicator.

Accepted Answer

a.First compute the value of the lease u

Question 3

Which statement is correct?

Accepted Answer

A)  In an operating lease, the lessee uses the asset for most of the asset's useful life. 
B)  The lessee expenses the cost of the lease in the period the benefits are received in an operating lease. 
C)  An operating lease transfers the risks and rewards from the lessor to the lessee. 
D)  In an operating lease, the lessee records an asset for the property being used. 
A)  In an operating lease, the lessee uses the asset for most of the asset's useful life. 
B)  The lessee expenses the cost of the lease in the period the benefits are received in an operating lease. 
C)  An operating lease transfers the risks and rewards from the lessor to the lessee. 
D)  In an operating lease, the lessee records an asset for the property being used.

Question 4

Complete this table identifying the key differences between IFRS and ASPE standards for leasing.

Accepted Answer

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Question 5

Which statement is correct?

Accepted Answer

A)  In a finance lease, the lessee uses the asset for only a short fraction of the asset's useful life. 
B)  The lessee expenses the cost of the lease in the period the benefits are received in a finance lease. 
C)  A finance lease transfers the risks and rewards from the lessee to the lessor. 
D)  In a finance lease, the lessee records an asset for the property being used. 
A)  In a finance lease, the lessee uses the asset for only a short fraction of the asset's useful life. 
B)  The lessee expenses the cost of the lease in the period the benefits are received in a finance lease. 
C)  A finance lease transfers the risks and rewards from the lessee to the lessor. 
D)  In a finance lease, the lessee records an asset for the property being used.

Question 6

Identify whether the following characteristics/facts are relevant to a finance (capital)lease.

Accepted Answer

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Question 7

The following amortization schedule is for a lease entered into at the start of fiscal 2017 for an asset that will be useful for 5 years.The company uses straight-line depreciation method.
   Required:
Provide the appropriate presentation of this lease in the lessee's balance sheet for December 31,2019,distinguishing amounts that are current from those that are non-current.

Accepted Answer

Balance sheet presentation for December

Question 8

Company A and Company B operate in the same industry,where leasing assets is common practice.Company A engages in more finance leases than Company B.Company B's leases are classified as operating leases.Which of the following statements is correct?

Accepted Answer

A)  Company A will appear stronger financially than company B. 
B)  Company A will appear weaker financially than company B. 
C)  The leasing type does not make a difference and both companies will appear equal financially. 
D)  Company B will appear weaker financially than company A. 
A)  Company A will appear stronger financially than company B. 
B)  Company A will appear weaker financially than company B. 
C)  The leasing type does not make a difference and both companies will appear equal financially. 
D)  Company B will appear weaker financially than company A.

Question 9

Summarize the main disclosure requirements of lessors,as they pertain to finance leases.

Accepted Answer

The main disclosure requirements are as

Question 10

For the following lease,under IFRS,determine the minimum present value calculation for the lessee.

Accepted Answer

A)  99,607 
B)  102,711 
C)  105,444 
D)  108,847 
A)  99,607 
B)  102,711 
C)  105,444 
D)  108,847

Question 11

Which statement is correct about the "guaranteed residual value"?

Accepted Answer

A)  It is not included in the minimum lease payment calculation. 
B)  Lessee assumes the risk of the property falling below the guaranteed amount. 
C)  Lessor assumes the risk of the property falling below the guaranteed amount. 
D)  It is an executory cost in the lease arrangement. 
A)  It is not included in the minimum lease payment calculation. 
B)  Lessee assumes the risk of the property falling below the guaranteed amount. 
C)  Lessor assumes the risk of the property falling below the guaranteed amount. 
D)  It is an executory cost in the lease arrangement.

Question 12

In general,which statement is correct?

Accepted Answer

A)  Lessees prefer finance leases. 
B)  Lessees prefer operating leases. 
C)  Operating leases are more favourable to the lessor in the short term. 
D)  Finance leases are more favourable to the lessee in the short term. 
A)  Lessees prefer finance leases. 
B)  Lessees prefer operating leases. 
C)  Operating leases are more favourable to the lessor in the short term. 
D)  Finance leases are more favourable to the lessee in the short term.

Question 13

On July 1,2016,Jupiter Company leased equipment to Planet Company.The terms of the lease are as follows:
   Planet uses straight-line depreciation for its property,plant,and equipment,and its year -end is December 31.
Required:
Prepare the journal entries for the lessee from July 1 through December 31,2016.

Accepted Answer

First compute the value of the lease usi

Question 14

Which will decrease the "agency cost of leasing"?

Accepted Answer

A)  Leased assets that are easy to damage. 
B)  Leased assets that require maintenance and care by the lessee. 
C)  Having lease terms that cover small portions of the asset's useful life. 
D)  Having an unguaranteed residual value by the lessee. 
A)  Leased assets that are easy to damage. 
B)  Leased assets that require maintenance and care by the lessee. 
C)  Having lease terms that cover small portions of the asset's useful life. 
D)  Having an unguaranteed residual value by the lessee.

Question 15

The following are some of the characteristics of an asset available for lease:
   Required:
a.Determine the amount of lease payment that the lessor would require to lease the asset.
b.Compute the present value of minimum lease payments for the lessee.
c.Compute the present value of minimum lease payments for the lessor.
d.Evaluate whether the lessee should classify the lease as operating or capital lease using the quantitative guidelines in ASPE.

Accepted Answer

a.Computation of required lease payments

Question 16

Here are the terms of a lease agreement:
   Required:
a.Determine the amount of lease payment that the lessor would require to lease the asset.
b.Compute the present value of minimum lease payments for the lessee.

Accepted Answer

a.Computation of required lease payments

Question 17

For the following lease,determine the minimum present value calculation for the lessee.

Accepted Answer

A)  113,723 
B)  119,781 
C)  131,109 
D)  138,838 
A)  113,723 
B)  119,781 
C)  131,109 
D)  138,838

Question 18

For the following lease,determine the minimum present value calculation for the lessor.

Accepted Answer

A)  83,400 
B)  92,711 
C)  98,048 
D)  102,304 
A)  83,400 
B)  92,711 
C)  98,048 
D)  102,304

Question 19

Which statement is correct about the "guaranteed residual value"?

Accepted Answer

A)  It is assurance that the lessee will take care of the property. 
B)  It is provided by the lessor. 
C)  Lessor assumes the risk of the property falling below the guaranteed amount. 
D)  It is not included in the minimum lease payment calculation. 
A)  It is assurance that the lessee will take care of the property. 
B)  It is provided by the lessor. 
C)  Lessor assumes the risk of the property falling below the guaranteed amount. 
D)  It is not included in the minimum lease payment calculation.

Question 20

For the following lease,under IFRS,determine the minimum present value calculation for the lessee.

Accepted Answer

A)  92,431 
B)  97,516 
C)  99,237 
D)  104,989 
A)  92,431 
B)  97,516 
C)  99,237 
D)  104,989

Which statement is correct respecting the criteria for determining whether a lease is an operating or a finance lease?

Which statement is correct?

Complete this table identifying the key differences between IFRS and ASPE standards for leasing.

Which statement is correct?

Identify whether the following characteristics/facts are relevant to a finance (capital)lease.

Company A and Company B operate in the same industry,where leasing assets is common practice.Company A engages in more finance leases than Company B.Company B's leases are classified as operating leases.Which of the following statements is correct?

Summarize the main disclosure requirements of lessors,as they pertain to finance leases.

For the following lease,under IFRS,determine the minimum present value calculation for the lessee.

Which statement is correct about the "guaranteed residual value"?

In general,which statement is correct?

Which will decrease the "agency cost of leasing"?

Here are the terms of a lease agreement: Required: a.Determine the amount of lease payment that the lessor would require to lease the asset. b.Compute the present value of minimum lease payments for the lessee.

For the following lease,determine the minimum present value calculation for the lessee.

For the following lease,determine the minimum present value calculation for the lessor.

Which statement is correct about the "guaranteed residual value"?

For the following lease,under IFRS,determine the minimum present value calculation for the lessee.

Current Liabilities and Contingencies

Non-Current Financial Liabilities

Equities

Complex Financial Instruments

Earnings Per Share

Accounting for Income Taxes

Pensions and Other Employee Future Benefits

Statement of Cash Flows

Accounting Changes

Filters

Exam 8: Accounting for Leases

Which statement is correct respecting the criteria for determining whether a lease is an operating or a finance lease?

Which statement is correct?

Complete this table identifying the key differences between IFRS and ASPE standards for leasing.

Which statement is correct?

Identify whether the following characteristics/facts are relevant to a finance (capital)lease.

Company A and Company B operate in the same industry,where leasing assets is common practice.Company A engages in more finance leases than Company B.Company B's leases are classified as operating leases.Which of the following statements is correct?

Summarize the main disclosure requirements of lessors,as they pertain to finance leases.

For the following lease,under IFRS,determine the minimum present value calculation for the lessee.

Which statement is correct about the "guaranteed residual value"?

In general,which statement is correct?

Which will decrease the "agency cost of leasing"?

Here are the terms of a lease agreement: Required: a.Determine the amount of lease payment that the lessor would require to lease the asset. b.Compute the present value of minimum lease payments for the lessee.

For the following lease,determine the minimum present value calculation for the lessee.

For the following lease,determine the minimum present value calculation for the lessor.

Which statement is correct about the "guaranteed residual value"?

For the following lease,under IFRS,determine the minimum present value calculation for the lessee.

Current Liabilities and Contingencies

Non-Current Financial Liabilities

Equities

Complex Financial Instruments

Earnings Per Share

Accounting for Income Taxes

Pensions and Other Employee Future Benefits

Statement of Cash Flows

Accounting Changes

Filters