6 terms

acct 21 (46-51)

In a direct-financing lease, initial direct costs are added to the net investment in the lease.

In a sales-type lease, initial direct costs are expensed in the year of incurrence.

For operating leases, initial direct costs are deferred and allocated over the lease term.

All of these.
46. Which of the following statements is correct?
current portions in current liabilities and the remainder in noncurrent liabilities.
47. The Lease Liability account should be disclosed as
a. Lessee uses a higher interest rate than that used by lessor.

b. Set the lease term at something less than 75% of the estimated useful life of the property.

(((c. Write in a bargain purchase option.)))

d. Use a third party to guarantee the asset's residual value
48. To avoid leased asset capitalization, companies can devise lease agreements that fail to satisfy any of the four leasing criteria. Which of the following is not one of the ways to accomplish this goal?
Party recording the asset on its books: Seller-lessee

Party recording interest expense: Seller-lessee
49. If the lease in a sale-leaseback transaction meets one of the four leasing criteria and is therefore accounted for as a capital lease, who records the asset on its books and which party records interest expense during the lease period?
a. The seller-lessee removes the asset from its books.

(((b. The purchaser-lessor records a gain.)))

c. The seller-lessee records the lease as an operating lease.
50. In a sale-leaseback transaction where none of the four leasing criteria are satisfied, which of the following is false?
deferred and recognized as income over the term of the lease.
51. When a company sells property and then leases it back, any gain on the sale should usually be