CH 5 - Leases

Question 1

Taxes

Capitalized or Expense

Answer 1

EXPENSED

Question 2

Variant Amounts of Lease/ Rental Payments are recognized how

Rental/Lease payments 6 mon free calc.

Answer 2

EVEN INCREMENTS

Rental expense for year * 6/12 = Amount for 1st year

Question 3

Saleback Lease
Amortize / Deferred Gain
Expense / Record Gain

Answer 3

Amortize when you retain rights after lease

When lessor retains rights

Question 4

Lease Bonuses and NON refundable security deposits

Answer 4

amortized over the life of the lease

Question 5

Depreciation Amort Formula

Time period analysis

Answer 5

PV of payments - Residual Value * ( time)

Ownership/ Bargain Purchase = Economic Life
75% & 90% = Lease Life

Question 6

Leasehold Improvements Amortization

IFRS Amortization

Answer 6

Lesser of Lease Life or Economic Life

Question 7

Profit Formula
1- Capital Lease
2- Sales-type / Operating Lease

Answer 7

1 - PV - CV

2 - FMV - CV

Question 8

Capital Lease
1 - Lessee Records on Balance Sheet
2 - Valuation
3 -

Answer 8

1 - Asset/Liability
2 - LESSER of FMV @ inception or cost @ PV
3 - removes lease from books and only collects interest

Question 9

90% Rule

Answer 9

PV of lease payments = 90% of lease FMV

Question 10

IFRS capital lease difference

Answer 10

Substantially all risk and reward transferred

Question 11

Saleback Lease
1 -Gain
2 -Loss
3 - Other

Answer 11

1 -Deferred all except minor less than 10% SP or economic life recognize immediately
2 - ALL Recognized Immediately
3 - Deferred all except minor less than 10% SP or econmic life recognize immediately

Question 12

Direct Financing Lease

Answer 12

SP = FMV; recognized G/L immediately

Question 13

Initial Directs are included in

Answer 13

IFRS lease @ inception

Question 14

Question Phrasing

Current liabilities

Answer 14

amount due within a year from the date

Question 15

Sales type lease is

Answer 15

a capital lease that has new provisions in which it becomes an operating lease

Question 16

Sales-type lease COGS

Answer 16

CV-residual value

Question 17

Types of leases tested for impairment

Answer 17

capital leases and operating leases

Question 18

lease interest revenue earned

Answer 18

Lease amount collected (PV)

- CV or FMV of lease

Question 19

Lessor recognizes lease receivable
1 - valuation
2 - total

Answer 19

1 - minimum principle payment + residual value

2 - aggregate undiscounted amount + residual value

Question 20

Lessee F/S disclosure

Answer 20

five years of the present minimum balance

Question 21

Operating lease differs from capital in that..

Answer 21

there is only rental payments and NO interest payments

Question 22

Annuity in Advance

Annuity in Arrears

Answer 22

paid completely at inception

paid over the leasing period in equal increments