ACG 3113 Leases 2026 Exam
Questions and Verified Answers
| Already Graded A+
A lease is legally a/an ___________ contract.
A. mutually performed
B. executed
C. executory contract.
D. unilateral - 🧠ANSWER ✔✔C executory contract.
,When accounting for an operating lease, which one of the following
accounts are charged with the expense on the lessee's income statement?
A. Depreciation Expense
B. Amortization Expense
C.
D. Lease Operating Expense - 🧠ANSWER ✔✔C Rent Expense
The lessor of a building with an operating lease will present on its balance
sheet an asset equal to
A. zero.
B. the present value of future lease receipts.
C. the depreciated historical cost of the asset.
D. the fair value of the leased asset. - 🧠ANSWER ✔✔C. the depreciated
historical cost of the asset.
To remain in accordance with GAAP, operating leases require note
disclosure of the
A. amount of annual rental payments.
B. discounted present value of future lease payments.
, C. undiscounted present value of future lease payments.
D. future cash outflows arising from operating leases. - 🧠ANSWER ✔✔D.
future cash outflows arising from operating leases.
Compared to a firm with a capital lease, operating leases help the lessee
firm earn
A. higher asset turnover ratio.
B. lower return on assets.
C. higher debt-to-equity ratio.
D. lower NOPAT. - 🧠ANSWER ✔✔A. higher asset turnover ratio.
If a corporation signs a ten-year lease for a building and the present value
of the lease payments is $250,000, the lease is a capital lease if the
A. fair value of the building is $1,000,000.
B. remaining useful life of the building is 20 years.
C. lessor can purchase the building for $5,000 at the end of the lease when
the fair value is estimated to be $25,000.
COPYRIGHT©JOSHCLAY 2025/2026. YEAR PUBLISHED 2025. COMPANY REGISTRATION NUMBER: 619652435. TERMS OF USE. PRIVACY
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STATEMENT. ALL RIGHTS RESERVED
Questions and Verified Answers
| Already Graded A+
A lease is legally a/an ___________ contract.
A. mutually performed
B. executed
C. executory contract.
D. unilateral - 🧠ANSWER ✔✔C executory contract.
,When accounting for an operating lease, which one of the following
accounts are charged with the expense on the lessee's income statement?
A. Depreciation Expense
B. Amortization Expense
C.
D. Lease Operating Expense - 🧠ANSWER ✔✔C Rent Expense
The lessor of a building with an operating lease will present on its balance
sheet an asset equal to
A. zero.
B. the present value of future lease receipts.
C. the depreciated historical cost of the asset.
D. the fair value of the leased asset. - 🧠ANSWER ✔✔C. the depreciated
historical cost of the asset.
To remain in accordance with GAAP, operating leases require note
disclosure of the
A. amount of annual rental payments.
B. discounted present value of future lease payments.
, C. undiscounted present value of future lease payments.
D. future cash outflows arising from operating leases. - 🧠ANSWER ✔✔D.
future cash outflows arising from operating leases.
Compared to a firm with a capital lease, operating leases help the lessee
firm earn
A. higher asset turnover ratio.
B. lower return on assets.
C. higher debt-to-equity ratio.
D. lower NOPAT. - 🧠ANSWER ✔✔A. higher asset turnover ratio.
If a corporation signs a ten-year lease for a building and the present value
of the lease payments is $250,000, the lease is a capital lease if the
A. fair value of the building is $1,000,000.
B. remaining useful life of the building is 20 years.
C. lessor can purchase the building for $5,000 at the end of the lease when
the fair value is estimated to be $25,000.
COPYRIGHT©JOSHCLAY 2025/2026. YEAR PUBLISHED 2025. COMPANY REGISTRATION NUMBER: 619652435. TERMS OF USE. PRIVACY
3
STATEMENT. ALL RIGHTS RESERVED
