Question 1

Which of the following is a financial disclosure that a lessee must make on its financial statements?
A)the amount of actual interest expense for capital leases
B)a specific description for each lease contract
C)future minimum lease payments for the next ten years
D)the leased assets included in property,plant,and equipment

Accepted Answer

The future minimum lease payments for the next ten years is a disclosure that a lessee must make on its financial statements. This information is important for investors and creditors to understand the lessee's future cash outflows related to leasing activities. Choices A, B, and D are not specific financial disclosures required for lessees on their financial statements.

Question 2

The lease multiplier developed by credit rating agencies to estimate the capitalized value of long-term operating leases calculated as 1 divided by the discount rate.

Accepted Answer

The lease multiplier is indeed calculated as 1 divided by the discount rate. It is used to estimate the capitalized value of long-term operating leases, which is necessary for accounting and financial reporting purposes. The lease multiplier is often developed by credit rating agencies, as they have the expertise and tools to evaluate the creditworthiness of companies and their lease obligations.

Question 3

When using the discounted cash flow approach to lease capitalization,how is the off-balance sheet lease obligation estimated?
A)present value of the replacement cost of the leased asset
B)rent expense times capitalization rate
C)present value of the future minimum lease payments
D)present value of the historical cost of the leased asset

Accepted Answer

The answer of When using the discounted cash flow approach...

Question 4

Under U.S.GAAP,the lessor disclosure requirements include total future minimum lease payments for all operating leases.

Accepted Answer

The answer of Under U.S.GAAP,the lessor disclosure requirements include total...

Question 5

When using the multiplier approach to lease capitalization,which of the following is not a factor that must be estimated?
A)depreciation expense
B)interest expense
C)rent expense
D)fair value of the leased asset

Accepted Answer

The answer of When using the multiplier approach to lease...

Question 6

Which of the following is a disclosure that a lessee must make within its financial statements?
A)aggregated lease payments on both capital and operating leases for the next five years
B)the original amounts of debt associated with each lease
C)rent expense for the three year period covered by the income statement
D)the original cost of assets leased under operating leases

Accepted Answer

The answer of Which of the following is a disclosure...

Question 7

Under U.S.GAAP,the lessee's required disclosures include required lease payments for both operating and capital leases for the next five years.

Accepted Answer

According to U.S. GAAP, a lessee is required to disclose the amount of required lease payments for both operating and capital leases for each of the next five years.

Question 8

Under IFRS,the lessee's required disclosures include required lease payments for both operating and capital leases for each of the next five years.

Accepted Answer

This statement is true according to the IFRS lease accounting standard. Lessees must disclose the required lease payments for operating and capital leases for the next five years in their financial statements.

Question 9

What disclosures must a lessor include on its financial statements for all leases to which it has entered?

Accepted Answer

The answer of What disclosures must a lessor include on...

Question 10

Hyde Company leased equipment to Pittman Corporation under a six year lease agreement that qualifies as a direct financing lease.The asset cost $160,000.The lease contains a bargain purchase option that is effective at the end of the sixth year.The asset has an expected economic life of 12 years and is expected to have a residual value of $4,000 at the end of the 12th year.Assuming that straight-line depreciation is used,what would be the annual depreciation?
A)$26,000
B)$26,667
C)$13,333
D)$13,000

Accepted Answer

The answer of Hyde Company leased equipment to Pittman Corporation...

Question 11

Which of the following is a disclosure that a lessor must make within its financial statements?
A)components of the net investment in both sales-type and direct-finance capital leases
B)aggregated minimum lease payments for the next five years
C)future minimum lease payments on both cancellable and non-cancellable operating leases
D)the original cost of assets held and leased to others under operating leases

Accepted Answer

A lessor must disclose the components of the net investment in both sales-type and direct-finance capital leases within its financial statements. This is required under ASC 840-20-50-8. Option B, C, and D are also common disclosures for lessors, but they are not mandatory under accounting standards.

Question 12

What is a requirement for lease disclosures under IFRS?
A)IFRS requires disclosure of the fair value of all leased assets.
B)IFRS requires disclosure of future lease payments for each of the next five years.
C)IFRS requires that lessee companies disclose future lease payments for the first year,the total of years two through five,and the remaining aggregate payments.
D)IFRS requires disclosure of rent expense for the five year period.

Accepted Answer

The answer of What is a requirement for lease disclosures...

Question 13

Under U.S.GAAP,the disclosure requirements for lessors with operating leases include the cost or carrying value of assets held and leased to others,net of depreciation.

Accepted Answer

According to ASC 840-20-50-1, the disclosure requirements for lessors with operating leases include "a general description of the lessor’s leasing arrangements, including their nature, such as type and duration of lease, and the basis on which contingent rental payments are determined" as well as "the cost or carrying amount of assets held for lease, including a description of significant leasing arrangements and the policy followed in regard to the recognition of income from such arrangements." The disclosure should be presented net of accumulated depreciation.

Question 14

What disclosures must a lessee include on its financial statements for all leases to which it has entered?

Accepted Answer

The answer of What disclosures must a lessee include on...

Quiz 22: Accounting Corrections and Error Analysis

Which of the following is a financial disclosure that a lessee must make on its financial statements?

The lease multiplier developed by credit rating agencies to estimate the capitalized value of long-term operating leases calculated as 1 divided by the discount rate.

When using the discounted cash flow approach to lease capitalization,how is the off-balance sheet lease obligation estimated?

Under U.S.GAAP,the lessor disclosure requirements include total future minimum lease payments for all operating leases.

When using the multiplier approach to lease capitalization,which of the following is not a factor that must be estimated? A)depreciation expense B)interest expense C)rent expense D)fair value of the leased asset

Which of the following is a disclosure that a lessee must make within its financial statements?

Under U.S.GAAP,the lessee's required disclosures include required lease payments for both operating and capital leases for the next five years.

Under IFRS,the lessee's required disclosures include required lease payments for both operating and capital leases for each of the next five years.

What disclosures must a lessor include on its financial statements for all leases to which it has entered?

Which of the following is a disclosure that a lessor must make within its financial statements?

Under U.S.GAAP,the disclosure requirements for lessors with operating leases include the cost or carrying value of assets held and leased to others,net of depreciation.

What disclosures must a lessee include on its financial statements for all leases to which it has entered?