Concept – Lease Payments
Intermediate Accounting
Spiceland, Nelson, and Thomas
10th Edition
What compound interest table should be used to identify the amount of the right-of-use asset?
What compound interest table should be used to identify the amount of the right-of-use asset?
What is the truth when the operating lease life expenses are compared to life expenses of a finance lease?
What will be reflected on the income statement?
What best describes an operating lease?
Whether classified as a finance or operating lease, a lease agreement affects the lessee’s debt-to-equity ratio and rate of return on assets at the start of the lease.
Finance leases are contracts that appear as leases but are essentially installment purchases.
If a lease starts “at or near the end” of an asset’s economic life, the rule that the lease term should cover the majority of the economic life does not apply in lease classification. This is because the ownership risks and rewards have mostly been encountered prior to that stage.
An asset is an operating lease if it has no alternative use to the lessor at the end of the lease term due to its specialized nature.
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.