Remaining Time: 51 minutes, 59 seconds. QUESTION 10 At the beginning of a financ

Question

Remaining Time: 51 minutes, 59 seconds. QUESTION 10 At the beginning of a finance lease, a guaranteed residual value should be: O Included as part of lease payments only to the exten O Included as part of lease payments at future value. O Excluded from lease payments included as part of lease payments at present value. t that guaranteed residual value is expected to exceed estimated residual value QUESTION 11 O The lessee will report more net income for the year. O GAAP has been violated by at least one party O The lessee is unaware of the lessors implicit rate QUESTION 12 If the leaseback portion of a sale-leaseback transaction is classified as an operating lease O Any gain is deferred and recognized as a reduction of rent expense gain is deferred and recognized as a reduction of depreciation. Any Any gain is recognized at the lease's inception O There can be no gain

Explanation / Answer

Question 10
At the inception of a capital lease, the guaranteed residual value should be
D. Included as part of lease payments at present value

Question 11
If the lessee and lessor use different interest rates to account for a Finance/Sales-type lease, then:
C) The lessee is unaware of the lessor's implicit rate
Total expenses for the lessee will be different from the lessor's total revenues.

Question 12.
If the leaseback portion of the sale-leaseback transaction were classified as an operating lease
A) Any gain is deferred and recognized as a reduction of rent expense
If the leaseback portion of the sale-leaseback transaction were classified as an operating lease, the gain still would be deferred and recognized as a reduction of rent expense rather than depreciation.

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