Quiz 15.05 – T/F Understanding Bargain Purchase Option
Intermediate Accounting
Spiceland, Nelson, and Thomas
10th Edition
The option to purchase leased property at an expected fair value price is referred to as a bargain purchase option.
The option to purchase leased property at an expected fair value price is referred to as a bargain purchase option.
Operating leases require lessees to recognize lease expenses on a straight-line basis.
The lessee will increase the recorded value of both the right-of-use asset and lease liability by $75,000 if they provide a guarantee for an estimated residual value of the same amount.
When the lessee is anticipated to assume ownership of a leased asset at the end of the lease term, the lessor is required to utilize an estimated residual value to determine the lease payments needed to attain a target rate of return.
If a transaction meets the criteria for sale-leaseback accounting (excluding financing arrangements), any profit made on the “sale” segment is acknowledged right away.
What is the underlying theoretical basis for treating certain lease agreements as asset purchases under GAAP?
What type of lease is Crystal Corporation most likely to have based on the provided information?
Considering Porter Moving and Storage’s lease agreement with annual payments, a contingent lease payment, and a probability of meeting revenue targets, what, if any, amount should be added to the right-of-use asset and lease payable?
Which circumstance triggers a lessee to reassess variable lease payments that are tied to an index or a rate?
How can leases be classified from the perspective of the lessee?