Leases Flashcards
How to calculate finance lease liability for the balance sheet on December 31, Year 2? Payments made at inception
Why does each lease payment split between interest and principal reduction in a finance lease?
How to calculate the initial ROU asset and lease liability in a finance lease with guaranteed residual value?
How to calculate the lease liability at Year-End in a finance lease when the first payment fully reduces principal?
How to determine the amount to capitalize as a Right-of-Use (ROU) asset for a finance lease with payments at the beginning of each period?
How to calculate the straight-line monthly rent expense for an operating lease with rent-free periods?
What are the key differences between a finance lease and an operating lease?
How do you calculate annual amortization expense for a Right-of-Use (ROU) asset when the lease term is shorter than the asset’s useful life?
How do you determine the initial lease liability when a finance lease includes a likely-to-be-exercised purchase option?
Key Indicators of Reasonable Certainty that a Purchase option is likely to be exercised.
How do you determine the ROU asset at inception for a finance lease?
What components and nonlease components are included and excluded in PV lease obligation?
What are the five criteria, of which at least one must be met, to classify a lease as a finance lease?
Calculate Carrying Value of Right-of-Use (ROU) Asset in Finance Lease
What all goes into calculating the PV of Lease liability
When do operating lease expense begin accruing? (ie rent expense)
How to calculate initial Right-of-Use (ROU) Asset balance for Operating Lease with Lease Incentives
Guaranteed residual value vs expected residual value
PV of lease payments and PV of PO. At the end of the lease term, should there be a left over balance if the PO is likely to be exercised?
Yes
Lease Expense Components – Included vs. Excluded
Steps to Calculating Lease Liability with a Residual Value guarantee and first lease pmt
How are initial direct costs accounted for in the lease. What accounts and how treated over time?
How does a lessee record monthly lease expense for a short-term lease?
What assets are recorded by a lessee for long-term improvements to a leased building under an operating lease agreement
When do you use the Useful life or the Lease Term in PV calcs
How do you calculate interest expense for a finance lease, and how does it change over time
What components are included in the total lease payments used to calculate the initial lease liability
To calculate rent expense in an operating lease:
How do you calculate the Right-of-Use (ROU) asset for an operating lease at lease inception, with 6 months off, lease incentive
How do calculations for ROU asset amortization differ from lease liability reduction?
What are the criteria to classify a lease as a finance lease under ASC 842?
How are initial direct costs treated in lease accounting
When should you use the implicit rate, incremental borrowing rate, or market rate for leases and debt?
Remember, when calculating the ROU Asset value, if theres lease incentives involved, ______
DEDUCT THEM at PV
