Chapter 15 Flashcards Preview

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Flashcards in Chapter 15 Deck (17)
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1
Q

User of a leased asset

A

Lessee

2
Q

Owner of a leased asset

A

Lessor

3
Q

Fundamental rights and responsibilities of ownership are retained by the lessor and the lessee is only using the asset temporarily

A

Operating Leases

4
Q

Installment purchases/sales that are formulated outwardly as leases

A

Capital Leases

5
Q

Leases where the lessor finances the asset for the lessee and earns interest revenue over the lease term

A

Direct Financing Lease

6
Q

In addition to interest revenue earned over the lease term, the lessor receives a manufacturer’s or dealer’s profit on the sale of the asset

A

Sales-type Lease

7
Q

Provision in the lease contract that gives the lessee the option of purchasing the leased property at a bargain price

A

Bargain Purchase Option (BPO)

8
Q

Useful life of an asset

A

Expected Economic Life

9
Q

Gives the lessee the option to renew the lease at a bargain rate

A

Bargain Renewal Option

10
Q

Payments that the lessee is required to make in connection with the lease

A

Minimum Lease Payment

11
Q

Lease agreements may call for uneven rent payments during the term of the lease

A

Rent Abatement

12
Q

Account title when a lessee makes improvements to leased property that reverts back to the lessor at the end of the lease

A

Leasehold Improvements

13
Q

Total of periodic rental payments and residual value

A

Gross Investment in the Lease

14
Q

Maintenance, insurances, taxes, and any other costs usually associated with ownership

A

Executory Costs

15
Q

Costs incurred by the lessor that are associated directly with originating a lease and are essential to acquire the lease

A

Initial Direct Costs

16
Q

The owner of an asset sells it and immediately leases it back from the new owner

A

Sale-leaseback Transaction

17
Q

Involves land-exclusively or in part

A

Real Estate Leases