FAR 6.1

Question 1

operating lease

when should a lessor recognize a nonrefundable lease bonus?

Answer 1

over the life of the lease

Question 2

Operating lease expense must be recorded equally over the life of the lease. What are the JE’s to record in year one?

lease amounts due, 3 year lease

1. 25k
2. 30k
3. 35k

Answer 2

1/1
Dr. Prepaid rent 25k
Cr. cash 25k

first 10 mths
Dr. Rent expense 2500
Cr. Prepaid rent 2500

final 2 mths
Dr. Rent expense 2500
Cr. Rent payable (liability) 2500

Question 3

operating lease

Lease questions with security deposits, how are they recorded?

Answer 3

recorded as an asset, not amortized as rent expense

Question 4

operating lease expense for a lessee should be calculated using the?

Answer 4

straight line basis

Question 5

operating lease

lessor accrued rent receivable calc

Answer 5

if payments are not level, then rent revenue is recognized on a straight line basis

any difference b/t revenue recognized and the amount actually received is a receivable or payable.

Question 6

the gain in a capital lease back should be?

Answer 6

deferred and classified as an asset valuation account.

it’s amortized in proportion to depreciation taken

Question 7

A sales lease back that results in a loss should be classified how?

Answer 7

book the loss in the current year