Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN: 9781337395083
Author: Eugene F. Brigham, Phillip R. Daves
Publisher: Cengage Learning
expand_more
expand_more
format_list_bulleted
Concept explainers
Question
Chapter 19, Problem 8Q
Summary Introduction
To determine: The affect would a cancellation clause have on the lessee’s analysis and on the lessor’s analysis.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
In our Anderson Company example, we assumed that the lease could notbe canceled. What effect would a cancellation clause have on the lessee’sanalysis? On the lessor’s analysis?
Under ASPE, the lessor is required to expense any direct costs associated with a lease up front. True False
Kindly solve it.
How do you think expense stops and CPI adjustments in leases affect the riskiness of the lease from the lessor’s point of view?
Chapter 19 Solutions
Intermediate Financial Management (MindTap Course List)
Ch. 19 - Define each of the following terms: a. Lessee;...Ch. 19 - Distinguish between operating leases and financial...Ch. 19 - Prob. 3QCh. 19 - Prob. 4QCh. 19 - Prob. 5QCh. 19 - Prob. 6QCh. 19 - Prob. 7QCh. 19 - Prob. 8QCh. 19 - Reynolds Construction (RC) needs a piece of...Ch. 19 - Lease versus Buy Consider the data in Problem...
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.Similar questions
- Ch19-1: Is leasing a zero sum game in the sense that any gain to the lessee is a cost to the lessor? If not, how might both parties gain from a lease transaction? In your answer, explain how lessee and the lessor analyze the situation, why they might use different inputs in their analysis, and how those inputs differences could affect the outcomearrow_forwardThe use of the fair value option to account for Non - current liabilities is allowed by IFRS . Many companies would prefer to use the fair value option . Do you agree ? Explain why .arrow_forwardPacker Company (the lessor) concludes that its lease meets one of the tests to be classified as a sales-type lease. However, collection of lease payments is not probable. In this case, how should Packer account for any lease payments received?arrow_forward
- What would be the advantages and disadvantages of leasing assets instead of owning them? How would the financial statements be different in a leasing situation (for both operating leases and finance leases) for the lessee? What about the lessor (including all of the types)? What disclosures should be made by lessees and lessors related to future lease payments?arrow_forwardOne of the following statements is false: a. If the underlying asset will not revert to the lessor, the residual value is simply ignored by the lessor in the computation of unearned interest income and gross profit on the sale. b. The underlying asset will remain with the lessee if the lease provides for either a purchase option that is reasonably to be exercised or transfer of title to the lessee upon the lease expiration. c. When a lessor actually sells an asset that it has been leasing, the difference between the sales price and the carrying amount of the lease receivable is recognized in profit or loss. d. The gain or loss that pertains to the right retained by the seller-lessee in a sales and leaseback transaction is not recognized.arrow_forward24. One of the following statements is false: * a. If the underlying asset will not revert to the lessor, the residual value is simply ignored by the lessor in the computation of unearned interest income and gross profit on the sale. b. The underlying asset will remain with the lessee if the lease provides for either a purchase option that is reasonably to be exercised or transfer of title to the lessee upon the lease expiration. c. When a lessor actually sells an asset that it has been leasing, the difference between the sales price and the carrying amount of the lease receivable is recognized in profit or loss. d. The gain or loss that pertains to the right retained by the seller- lessee in a sales and leaseback transaction is not recognized.arrow_forward
- What is a substitution right, and when does that right result in a contract not being a lease?arrow_forwardWhich of the following arises when the seller's right to consideration from a customer is conditional upon something other than the passage of time? A receivable A contract asset A contract liability None of these choicesarrow_forwardDifferentiate between an operating lease, acapital (or financial) lease, and a sale andleaseback arrangement. How would the pastaccounting treatment of leases mislead investorsand what rules have been put in place to mitigatethis problem?arrow_forward
- determining whether a contract is or contains a lease? 1. Which of the following is not one of the criteria when c. Right to obtain substantially all of the economic benefits from use of an identified asset throughout the period of 'identified' if it is implicitly specified in the contract. C. the customer shall not account for the contract as a lease if a. the customer shall not account for the contract as a lease. b. the customer shall account for the contract as a lease. d. the customer shall account for the contract as a lease if that it has the right to direct the use of the asset. PROBLEM 2: MULTIPLE CHOICE - THEORY a. Identified asset b. Identified liability from use of an identified asset throughout the period of d. Right to direct the use of the identified asset throughout the period of use use 2. Which of the following statements is incorrect? a. An asset can be 'identified' if it is implicitly specified at the time it is made available for use by the lessee. b. In a lease…arrow_forwardWhich of the following statements about purchase option is correct? a. None of the other choices is correct. b. Its present value is added to get the lease liability if it is reasonably certain that it will be exercised. c. it is ignored if the leased asset reverts back to the lessor at the end of the useful life. d. The lessee includes its present value on the computation of lease liability only if it is guaranteed.arrow_forwardWhich of the following statements about purchase option is correct? The lessee includes its present value on the computation of lease liability only if it is guaranteed. None of the other choices is correct. It is ignored if the leased asset reverts back to the lessor at the end of the useful life. Its present value is added to get the lease liability if it is reasonably certain that it will be exercised.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Intermediate Financial Management (MindTap Course...FinanceISBN:9781337395083Author:Eugene F. Brigham, Phillip R. DavesPublisher:Cengage Learning
Business Its Legal Ethical & Global EnvironmentAccountingISBN:9781305224414Author:JENNINGSPublisher:Cengage
Intermediate Accounting: Reporting And AnalysisAccountingISBN:9781337788281Author:James M. Wahlen, Jefferson P. Jones, Donald PagachPublisher:Cengage Learning
Intermediate Financial Management (MindTap Course...
Finance
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Cengage Learning
Business Its Legal Ethical & Global Environment
Accounting
ISBN:9781305224414
Author:JENNINGS
Publisher:Cengage
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:Cengage Learning