Lease Accounting - Lessee

Question 1

Lease Liability - Payment at beginning of term

Answer 1

• PV factor for an annuity due is used
• Implicit interest rate is used if known; incremental borrowing rate if not known

Question 2

Lease Liability - Payment due at end of term (ordinary annuity)

Answer 2

PV Factor of ordinary annuity
- Implicit interest rate is used if known; incremental borrowing rate if not known

Question 3

Operating Lease

Answer 3

Lease expense - no interest expense is recorded

Question 4

Finance Lease

Answer 4

Interest Expense is recorded