F6 - M2 - Leases: Part 2

Question 1

If the lease is an operating lease, the balance sheet will reflect a ________ asset and __________ and both will be amortized over the life of the asset using _________ method

Answer 1

Right of Use asset and lease liability. Effective interest method

Question 2

On the income statement, _______ will be recognized each year of the lease term using the straight- line method for expense measurement.

Answer 2

lease expense

Question 3

If the lease is a finance lease, the lessee will recognize both an _______ and a corresponding ______ on its balance sheet.

Answer 3

ROU asset; liability

Question 4

Unlike with operating leases, the amortization of the ROU asset for a finance lease will be expensed based _____________

Answer 4

how the entity recognizes amortization expense on similar assets.

Question 5

Lessees can make an accounting policy election and choose to not recognize ROU assets and lease liabilities for leases with terms of ______________

Answer 5

12 months or less.

Question 6

On the commencement date of the lease, lessors will classify a lease as a (3)

Answer 6

sales-type, direct f inancing, or operating lease.

Question 7

In a sales-type lease, the lessor will derecognize the ______ and recognize a ______ in the lease, as well as a profit or loss.

Answer 7

asset, net investment in the lease, profit or loss

Question 8

In a direct financing lease, the lessor will derecognize the _____ and recognize a ________. Any gain will be deferred and amortized over the life of the lease, and any loss will be recognized immediately.

Answer 8

asset ; net investment in the lease

Question 9

In a direct financing lease, Any gain will be ______ and ________, and any ______ will be recognized immediately.

Answer 9

deferred; amortized over the life of the lease; any loss

Question 10

From the perspective of the lessor, any lease that does not qualify as a sales-type or direct financing lease will be an _______.

Answer 10

operating lease.

Question 11

In an operating lease, The lessor will keep the _____ on its balance sheet, which will include depreciating it and recognizing any impairment charges if applicable.

Answer 11

asset

Question 12

In an operating lease, ________ will be recognized on a straight-line basis, and ________ will be deferred and amortized over the lease term.

Answer 12

Lease income; initial direct costs

Question 13

Both lessees and lessors are required to make ________and __________disclosures regarding leases.

Answer 13

qualitative and quantitative