IA2 - Direct Financing (CHAP 13) Flashcards
Gross investment in the lease is equal to
a. Sum of the lease payments receivable by a lessor under a finance lease and any unguaranteed residual value accruing to the lessor.
b. The lease payments under a finance lease of the lessor.
c. Present value of lease payments under a finance lease of the lessor and any unguaranteed residual value.
d. Present value of the lease payments under a finance lease of the lessor
a. Sum of the lease payments receivable by a lessor under a finance lease and any unguaranteed residual value accruing to the lessor.
Net investment in a direct financing lease is equal to
a. Cost of the asset
b. Cost of the asset plus initial direct cost paid by the lessor
c. Cost of the asset minus guaranteed residual value
d. Cost of the asset plus unguaranteed residual value
b. Cost of the asset plus initial direct cost paid by the lessor
Which is the correct accounting treatment for a finance lease in the accounts of a lessor?
a. Noncurrent asset equal to net investment in lease and all finance payments in income statement.
b. Receivable equal to gross investment in the lease and recognize finance payments by reduction of debt.
c. Receivable equal to net investment in the lease and recognize finance payments by reducing debt and taking interest to income statement.
d. Receivable equal to net investment in the lease and all finance payments by reduction of debt
c. Receivable equal to net investment in the lease and recognize finance payments by reducing debt and taking interest to income statement.
Lessor shall recognize asset held under a finance lease as receivable at an amount equal to the
a. Gross investment in the lease
b. Net investment in the lease
c. Gross rentals
d. Residual value whether guaranteed or unguaranteed
b. Net investment in the lease
The lease receivable in a direct financing lease is
a. The gross amount of lease payments.
b. Gross rentals minus fair value of the leased asset.
c. The present value of lease payments.
d. The cost of the asset less any depreciation
c. The present value of lease payments.
The primary difference between a financing lease and a sales type lease is the
a. Manner in which rental collections are recorded.
b. Depreciation recorded each year by the lessor.
c. Recognition of dealer profit at the inception of the lease.
d. Allocation of initial direct costs incurred by the lessor.
c. Recognition of dealer profit at the inception of the lease.
All of the following would be included in the lease receivable, except
a. Guaranteed residual value
b. Unguaranteed residual value
c. A purchase option that is reasonably certain
d. All would be included
d. All would be included
Under a direct financing lease, the excess of aggregate rentals over the cost of the underlying asset should be recognized as income of the lessor
a. In increasing amounts during the term of the lease
b. In constant amount during the term of the lease
c. In decreasing amount during the term of the lease
d. After the cost of the underlying asset has been fully recovered through rent
c. In decreasing amount during the term of the lease
In a direct financing lease, unearned interest income
a. Amortized over the lease term using the interest method.
b. Amortized over the lease term using the straight line method.
c. Ignored
d. Recognized at the lease expiration
a. Amortized over the lease term using the interest method.
Which statement is true regarding initial direct costs incurred by the lessor?
a. In a direct financing lease, initial direct costs are added to the net investment in the lease.
b. In a sales type lease, initial direct costs are expensed as component of cost of goods sold.
c. In an operating lease, initial direct costs incurred by the lessor are deferred and allocated over the lease term.
d. All of these statements are correct
d. All of these statements are correct
