D105- UNIT 5- LESSOR ACCOUNTING FOR
LEASES EXAM QUESTIONS & ELABORATED
CORRECT ANSWERS
1. Company A (lessee) enters into a lease agreement with debit cash
$9,000, credit Company B (lessor). The term of the lease is five
years unearned rent $9,000. with monthly payments of $1,500.
Prior to the begin-
ning of the lease, Company A paid $9,000 in
advance. What is the journal entry the lessor
makes to record the advance payment?
2. For a sales-type lease: the gross profit will be
the same whether the
residual value is
guaranteed or un-
guaranteed.
3. A lessor with a sales-type lease involving an the sales price less
unguar- anteed residual value at the end of the the present value of the
lease term will report sales revenue in the resid- ual value.
period of inception of the lease at which of
the following amounts?
4. The initial direct costs of leasing are expensed in the
pe- riod of the sale
under a sales-type
lease.
5. When lessors account for residual values 6. Company A
related to leased assets, they leases a
piece of
machinery
to
Company B
1/
9
, D105- UNIT 5- LESSOR ACCOUNTING FOR
LEASES EXAM QUESTIONS & ELABORATED
CORRECT ANSWERS
on January 1, Year 1. Information pertaining to include the residual
the lease is as follows: val- ue in the
The lease is noncancellable with a term of three receivable mea-
years. surement because it is
•The machinery has a cost and fair value at as- sumed the residual
the start of the lease of $40,000; an estimated value will be realized.
economic life of
$0
2/
9
LEASES EXAM QUESTIONS & ELABORATED
CORRECT ANSWERS
1. Company A (lessee) enters into a lease agreement with debit cash
$9,000, credit Company B (lessor). The term of the lease is five
years unearned rent $9,000. with monthly payments of $1,500.
Prior to the begin-
ning of the lease, Company A paid $9,000 in
advance. What is the journal entry the lessor
makes to record the advance payment?
2. For a sales-type lease: the gross profit will be
the same whether the
residual value is
guaranteed or un-
guaranteed.
3. A lessor with a sales-type lease involving an the sales price less
unguar- anteed residual value at the end of the the present value of the
lease term will report sales revenue in the resid- ual value.
period of inception of the lease at which of
the following amounts?
4. The initial direct costs of leasing are expensed in the
pe- riod of the sale
under a sales-type
lease.
5. When lessors account for residual values 6. Company A
related to leased assets, they leases a
piece of
machinery
to
Company B
1/
9
, D105- UNIT 5- LESSOR ACCOUNTING FOR
LEASES EXAM QUESTIONS & ELABORATED
CORRECT ANSWERS
on January 1, Year 1. Information pertaining to include the residual
the lease is as follows: val- ue in the
The lease is noncancellable with a term of three receivable mea-
years. surement because it is
•The machinery has a cost and fair value at as- sumed the residual
the start of the lease of $40,000; an estimated value will be realized.
economic life of
$0
2/
9
