Lesson 12 Accounting For Leases Flashcards
Define Lessee
Person who holds the lease of a property. A tenant
Define Lessor
One that transfers property (such as a house or car) by a contract
Deferred Rent Expense
Variable rent Payments
How is a gain recognized in a sale leaseback that qualifies as a true sale and operating lease?
The gain or loss is recognized immediately on the income statement
What components of the lease receivable for a lessor involved in a direct financing lease ?
The minimum lease payment and assets residual value
Jays lease payments are made at the end of each period. Jays liability for a finance lease would be reduced periodically by the ?
Lease payment less the portion of the lease payment allocate to interest
A lease is classified as a finance lease bc it contains a purchase option likely to be exercised. What period of time should the lessee amortize the leased property ?
The economic life of the asset
Because the lessee will ultimately own the property
What amount to be reported in current liabilities for a finance lease at year end ?
Lease obligation x implicit rate = interest expense
Lease payment - interest expense = reduction in principal
This goes in current liabilities section
If a lease elects to excercise purchase option at the end of the lease how will it recognize amortization expense?
Capatilize amount - salvage value
SV= equipments life at end of the lease
If a finance lease has no title transfer and no purchase option likely to be excercised for financial reporting the lessee must amortize over?
The shorter of either the economic useful life (6) or lease term (5) years
When calculating the lease receivable for a direct financing lease the lessor will include?
The minimum lease payments and the assets residual value
Since the US dollar is both functional and reporting currency the company will
Remeasure transactions that occur in the local currency into the functional currency
