Quiz 15.25 – Criteria Used to Classify a Lease as a Finance Lease
Intermediate Accounting
Spiceland, Nelson, and Thomas
10th Edition
What is the criterion for classifying a lease as a finance lease?
What is the criterion for classifying a lease as a finance lease?
What is the immediate impact on the rate of return on assets and the debt/equity ratio when a company enters into an operating lease?
What is the immediate impact of recording a finance lease on the return on assets and debt/equity ratios for S Corp. with a 10% rate of return on assets and 2 to 1 debt/equity ratio?
Will the rate of return on assets of C Corp. increase when it records a lease, and if so, what type of lease?
What is the impact on B Corp.’s debt/equity ratio when recording a lease?
For which of the following liabilities is interest expense NOT calculated based on the effective interest rate multiplied by the amount of outstanding debt during the interest period?
How does the amortization of the right-of-use asset in the third year compare to that of the fourth year in a finance lease?
What is the portion of the periodic lease payment that represents the interest in the third year of a ten-year finance lease agreement?
What formula should M & O use in cell E8 to calculate the carrying value of the lease payable after the second lease payment in an Excel spreadsheet for a 5-year finance lease with an implicit interest rate of 6%?
What formula should M & O Company use in cell C8 of an Excel spreadsheet for a 5-year finance lease with an implicit interest rate of 6%?