Exam 15: Leases

Use the following to answer questions Refer to the following lease amortization schedule.The 10 payments are made annually starting with the inception of the lease.Title does not transfer to the lessee and there is no bargain purchase option or guaranteed residual value.The asset has an expected economic life of 12 years.The lease is noncancelable. -What is the total effective interest paid over the term of the lease?

Francisco leased equipment from Julio on December 31,2016.The lease is a 10-year lease with annual payments of $150,000 due on December 31 of each year beginning December 31,2016.The present value of the lease is $1,020,000.Francisco's incremental borrowing rate is 12% for this type of lease.The implicit rate of 10% is known by the lessee.What should be the balance in Francisco lease liability at December 31,2017?

Blue Co.recorded a right-of-use asset of $100,000 in a 10-year Type B lease.Payments of $16,275 are made annually at the end of each year.The interest rate charged by the lessor was 10%.Under the new ASU,the balance in the right-of-use asset after two years will be:

Of the four criteria for a capital lease,the one that most often is the decisive criteria is:

How do U.S.GAAP and International Financial Reporting Standards (IFRS)differ with respect to recognizing a gain on a sale and leaseback transaction?

On December 31,2016,B Corp.sold a machine to Royal and simultaneously leased it back for one year.Pertinent information at this date follows: In B's December 31,2016,balance sheet,the deferred revenue from the sale of this machine should be:

When the lessee guarantees an estimated residual value of $75,000,the amount the lessee records as a leased asset and lease liability is increased by $75,000.

In this situation,Reagan:

On January 1,2016,Princess Corporation leased equipment to King Company.The lease term is eight years.The first payment of $675,000 was made on January 1,2016.The equipment cost Princess Corporation $3,600,000.The present value of the minimum lease payments is $3,960,000.The lease is appropriately classified as a sales-type lease.Assuming the interest rate for this lease is 10%,how much interest revenue will Princess record in 2017 on this lease?

On a sale-leaseback transaction,any gain on the "sale" portion of the transaction is recognized immediately.

A direct financing lease is classified in the lessor's balance sheet as:

Use the following to answer questions Refer to the following lease amortization schedule.The 10 payments are made annually starting with the inception of the lease.Title does not transfer to the lessee and there is no bargain purchase option or guaranteed residual value.The asset has an expected economic life of 12 years.The lease is noncancelable. -What would be the outstanding balance after payment 10?

What is the interest revenue that Technoid would report on this lease in its 2016 income statement?

Under the new ASU,what amount did SmithCo record in its income statement for the reporting year ending December 31,2016,in connection with the lease?

Listed below are five terms followed by a list of phrases that describe or characterize each of the terms.Match each phrase with the number for the most correct term.

Technoid would account for this as:

A sales-type lease differs from a direct financing lease in one respect:

N Corp.entered into a nine-year capital lease on a warehouse on December 31,2016.Lease payments of $26,000,which includes real estate taxes of $1,000,are due annually,beginning on December 31,2017,and every December 31 thereafter.N does not know the interest rate implicit in the lease;N's incremental borrowing rate is 9%.The rounded present value of an ordinary annuity for nine years at 9% is 6.0.What amount should N report as capitalized lease liability at December 31,2016?

We classify a lease as a Type A lease if:

Mann Co.is the lessor in a six-year Type A lease beginning December 31,2016.The agreement specifies that Woo Corp.make equal annual lease payments on December 31 of each year.Under the new ASU,in its 2017 income statement: