Lease MCQs

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Howell Corporation, a publicly traded corporation, is the lessee in a leasing agreement with Brandon, Inc. to lease land and a building. If the lease ...






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Plantation Restaurant should treat the lease agreement with Cutter Electronics as a(n)






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Plantation Restaurant should treat the lease agreement with Cutter Electronics as a(n)






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Which of the following statements about a capital lease is false?






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If a company uses off-balance-sheet financing, assets have been acquired






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Which one of the following statements with respect to leases is correct?






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Fact Pattern: Neary Company has entered into a contract to lease computers from Baldwin Company starting on January 1, Year 1. Releva...






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Fact Pattern: Neary Company has entered into a contract to lease computers from Baldwin Company starting on January 1, Year 1. Releva...






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On January 1, Rosewater Company leased a computer for 4 years at a monthly rent of $80, payable at the end of each month. Due to the rate of technical...






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Keller Corporation signed a 3-year lease for an automobile on December 1. The automobile had a list price of $17,000 and an estimated useful life of 8...






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Lease M does not contain a bargain purchase option, but the lease term is equal to 90% of the estimated economic life of the leased property. Lease P...






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Bain Co. entered into a 10-year lease agreement for a new piece of equipment worth $500,000. At the end of the lease, Bain will have the option to pu...






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Which of the following is a criterion for a lease to be classified as a capital lease in the books of a lessee?






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Which of the following is a characteristic of a capital lease?






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The present value of minimum lease payments should be used by the lessee in determining the amount of a lease liability under a lease classified by t...






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Koby Co. entered into a capital lease with a vendor for equipment on January 2 for 7 years. The equipment has no guaranteed residual value. The lease...






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Quick Companys lease payments are made at the end of each period. Quicks liability for a capital lease will be reduced periodically by the






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On January 1, Year 4, Harrow Co., as lessee, signed a 5-year noncancelable equipment lease with annual payments of $100,000 beginning December 31, Yea...






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On January 2, Cole Co. signed an 8-year noncancelable lease for a new machine, requiring $15,000 annual payments at the beginning of each year. The ma...






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Leases should be classified by the lessee as either operating leases or capital leases. Which of the following statements best characterizes operatin...






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Leases should be classified by the lessee as either operating leases or capital leases. Which of the following statements best characterizes operatin...






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Peg Co. leased equipment from Howe Corp. on July 1, year 1 for an eight-year period expiring June 30, year 9. Equal payments under the lease are $60...






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Howe Co. leased equipment to Kew Corp. on January 2, year 1, for an eight-year period expiring December 31, year 8. Equal payments under the lease a...






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The excess of the fair value of leased property at the inception of the lease over its cost or carrying amount should be classified by the lessor as...






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In a lease that is recorded as a sales-type lease by the lessor, interest revenue






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Lease M does not contain a bargain purchase option, but the lease term is equal to 90% of the estimated economic life of the leased property. Lease ...






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On December 31, year 1, Day Co. leased a new machine from Parr with the following pertinent information: Lease term 6 years Annual rental payable a...






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On January 1, year 1, Day Corp. entered into a ten-year lease agreement with Ward, Inc. for industrial equipment. Annual lease payments of $10,000 a...






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Robbins, Inc. leased a machine from Ready Leasing Co. The lease qualifies as a capital lease and requires ten annual payments of $10,000 beginning i...






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Neal Corp. entered into a nine-year capital lease on a warehouse on December 31, year 1. Lease payments of $52,000, which includes real estate taxes...






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East Company leased a new machine from North Company on May 1, year 1, under a lease with the following information: Lease term 10 years Annual ren...






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On January 1, year 1, Babson, Inc. leased two automobiles for executive use. The lease requires Babson to make five annual payments of $13,000 begin...






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On December 30, year 1, Rafferty Corp. leased equipment under a capital lease. Annual lease payments of $20,000 are due December 31 for ten years. T...






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Oak Co. leased equipment for its entire nine-year useful life, agreeing to pay $50,000 at the start of the lease term on December 31, year 1, and $5...






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On December 31, year 1, Roe Co. leased a machine from Colt for a five-year period. Equal annual payments under the lease are $105,000 (including $5,...






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In the long-term liabilities section of its balance sheet at December 31, year 1, Mene Co. reported a capital lease obligation of $75,000, net of cu...






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For a capital lease, the amount recorded initially by the lessee as a liability should normally






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At the inception of a capital lease, the guaranteed residual value should be






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A six-year capital lease entered into on December 31, year 1, specified equal minimum annual lease payments due on December 31 of each year. The fir...






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A six-year capital lease expiring on December 31 specifies equal minimum annual lease payments. Part of this payment represents interest and part re...






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A lessee had a ten-year capital lease requiring equal annual payments. The reduction of the lease liability in year two should equal






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On January 2, year 1, Cole Co. signed an eight-year noncancelable lease for a new machine, requiring $15,000 annual payments at the beginning of eac...






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On January 2, year 1, Nori Mining Co. (lessee) entered into a five-year lease for drilling equipment. Nori accounted for the acquisition as a capita...






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On January 1, year 1, Harrow Co. as lessee signed a five-year noncancelable equipment lease with annual payments of $100,000 beginning December 31, ...






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On January 1, year 1, West Co. entered into a ten-year lease for a manufacturing plant. The annual minimum lease payments are $100,000. In the notes...






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Cott, Inc. prepared an interest amortization table for a fiveyear lease payable with a bargain purchase option of $2,000, exercisable at the end of ...






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On December 31, year 1, Lane, Inc. sold equipment to Noll, and simultaneously leased it back for twelve years. Pertinent information at this date is...






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The following information pertains to a sale and leaseback of equipment by Mega Co. on December 31, year 1: Sales price $400,000 Carrying amount $3...






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On December 31, year 1, Parke Corp. sold Edlow Corp. an airplane with an estimated remaining useful life of ten years. At the same time, Parke lease...






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On June 30, year 1, Lang Co. sold equipment with an estimated useful life of eleven years and immediately leased it back for ten years. The equipmen...






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On January 1, year 1, Hooks Oil Co. sold equipment with a carrying amount of $100,000, and a remaining useful life of ten years, to Maco Drilling fo...






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In a sale-leaseback transaction, the seller-lessee has retained the property. The gain on the sale should be recognized at the time of the sale-leas...






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Able sold its headquarters building at a gain, and simultaneously leased back the building. The lease was reported as a capital lease. At the time o...






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On January 1, year 1, Goliath entered into a five-year operating lease for equipment. In January year 3, Goliath decided that it no longer needs the...






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In January year 1, Hopper Corp. signed a capital lease for equipment with a term of twenty years. In year 3, Hopper negotiated a modification to a c...






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On January 1, year 1, Belkor entered into a 10-year capital lease for equipment. On December 1, year 4, Belkor terminates the capital lease and incu...






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Morgan Corp. signs a lease to rent equipment for ten years. The lease payments of $10,000 per year are due on January 2 each year. At the end of the...






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Santiago Corp. signs an agreement to lease land and a building for 20 years. At the end of the lease, the property will not transfer to Santiago. Th...






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Which of the following is not true regarding lease accounting under IFRS?






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Under IFRS what is the interest rate used by lessees to capitalize a finance lease when the implicit rate cannot be determined?