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    Prob11 4

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    Mobi Dela Cruz
    The document contains 10 multiple choice questions regarding accounting for leases. Specifically, it tests the examinee's knowledge of: 1) The accounting concept used to classify leases as operating or finance 2) What is and is not included in the definition of minimum lease payments from the standpoint of both the lessee and lessor 3) The criteria used to determine if a lease should be classified as a finance lease

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    Prob11 4

    Uploaded by

    Mobi Dela Cruz
    141 views3 pages
    The document contains 10 multiple choice questions regarding accounting for leases. Specifically, it tests the examinee's knowledge of: 1) The accounting concept used to classify leases as operating or finance 2) What is and is not included in the definition of minimum lease payments from the standpoint of both the lessee and lessor 3) The criteria used to determine if a lease should be classified as a finance lease

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    prob11-4

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    The document contains 10 multiple choice questions regarding accounting for leases. Specifically, it tests the examinee's knowledge of: 1) The accounting concept used to classify leases as operating or finance 2) What is and is not included in the definition of minimum lease payments from the standpoint of both the lessee and lessor 3) The criteria used to determine if a lease should be classified as a finance lease

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    141 views3 pages

    Prob11 4

    Uploaded by

    Mobi Dela Cruz
    The document contains 10 multiple choice questions regarding accounting for leases. Specifically, it tests the examinee's knowledge of: 1) The accounting concept used to classify leases as operating or finance 2) What is and is not included in the definition of minimum lease payments from the standpoint of both the lessee and lessor 3) The criteria used to determine if a lease should be classified as a finance lease

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 3

    Problem 11 – 4 Multiple Choice (IAA)

    1 The accounting concept that is principally used to classify lease into operating and
    finance is

    a. Substance over form


    b. Prudence
    c. Neutrality
    d. Completeness

    2. Which o the following is not included in the definition of minimum lease payments?

    a. Any payment is required by a bargain purchase option that is reasonably certain


    b. Costs for services and taxes to be paid by and reimbursed to the lessor
    c. Required payments over the lease term
    d Any amounts guaranteed by a party related to the lessee

    3. Which one of the following items is not part of the minimum lease payments from
    the standpoint of the lessee?

    a. The minimum lease payments called for by the lessee


    b. Any guarantee the lessee is required to make at the end of the lease term
    regarding any deficiency from a specified amount
    c. Any estimated residual value at the end of the lease term
    d. Any payment the lessee must make at the end of the lease term to purchase the
    leased property under a bargain purchase option

    4. From the standpoint of the lessee, the minimum lease payments included all of the
    following except

    a. The guaranteed residual value


    b. The lessee’s obligation to pay executor costs
    c. The bargain purchase option
    d. Any payment that the lessee must make upon failure to extend or renew the lease

    5. Which of the following would be considered an executor costs?

    a. Minimum lease payment


    b. Interest expense incurred
    c. Bargain purchase option
    d. Maintenance costs
    6. One of the four determinative criteria for a finance lease specifies that the lease term
    be equal or greater than

    a. The estimated economic life of the property


    b .90 percent of the estimated life of the property
    c. 75 percent of the estimated life of the property
    d. 50 percent of the estimated life of the property

    7. One of the four determinative criteria of a finance lease is that the present value at
    the beginning of the lease term of the minimum lease payments equal or exceeds

    a. The property’s fair market value


    b. 90 percent of the property’s fair market value
    c. 75 percent of the property’s fair market value
    d. 50 percent of the property’s fair market value

    8. An entity leased a machine having an expected useful life of 12 years. The


    noncancealable lease term is 10 years, and the entity may exercise bargain
    purchase option at the end of the noncancealable lease term. The machine should be
    capitalized by the entity depreciated value

    a. 9 years
    b.12years
    c. 10 years
    d. 10 or 12 years at the entity option

    9.If the residual value of a leased asset is greater than theamount guaranteed by the
    lessee

    a. The lessor pays the lessee for the difference


    b. The lessee recognizes a gain at the end of the lease term
    c. The lessee has no obligation related to the residual value
    d. The lessee pays the lessor for the difference

    10. Which of the following statements concerning guaranteed residual value is


    appropriate for the lessee?

    a. The asset and related liability should increased by the absolute amount of the
    residual value
    b. The asset and related liability should decreased by the absolute amount of the
    residual value
    c. The asset and related liability should decreased by the present value of the
    residual value
    d. The asset and related liability should increased by the present value of the
    residual value

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