ACCT 328 Special Accounting Problems in Leases(All
Accurately solved)
Unique Accounting Problems in Leases correct answers 1. Residual Values
2. Sales-type leases (lessor)
3. Bargain-purchase options
4. initial direct costs
5. current versus noncurrent classification
6. disclosure
Residual Value correct answers Estimated fair value of the leased asset at the end of the lease
term. Usually a significant number, especially if lease term is less than economic life
Guaranteed Residual Value correct answers Lessee agrees to make up any deficiency below a
stated amount that the lessor realized in residual value at the end of the lease term
Un-guaranteed Residual Value correct answers For the lessee, it is as if we are assuming there is
noooooo residual value at all
Sales-Type Lease correct answers Lessor. Based on the manufacturer's/dealer's gross profit/loss.
Lessor records the the sales price of the asset, the cost of goods sold, related inventory reduction
and the lease receivable
Lease Receivable correct answers Also referred to as Net Investment. Present value of the
minimum lease payments plus the present value of any unguaranteed residual value. Includes the
present value of the residual value, whether guaranteed or not/
Sales Price of the Asset correct answers Present value of the minimum lease payments
Cost of Goods Sold correct answers Cost of the asset to the lessor, less the present value of any
un-guaranteed residual value
Initial Direct Costs correct answers Have two types: incremental and internal
Incremental Direct Costs correct answers Paid to independent third parties for originating a lease
arrangement. EX=cost of independent appraisal of collateral used to secure a lease.
Internal Direct Costs correct answers Directly related to specific activities performed by the
lessor on a given lease. EX=evaluating the prospective lessee's financial condition
Internal Indirect Costs correct answers Activities performed for advertising, servicing existing
leases
Accurately solved)
Unique Accounting Problems in Leases correct answers 1. Residual Values
2. Sales-type leases (lessor)
3. Bargain-purchase options
4. initial direct costs
5. current versus noncurrent classification
6. disclosure
Residual Value correct answers Estimated fair value of the leased asset at the end of the lease
term. Usually a significant number, especially if lease term is less than economic life
Guaranteed Residual Value correct answers Lessee agrees to make up any deficiency below a
stated amount that the lessor realized in residual value at the end of the lease term
Un-guaranteed Residual Value correct answers For the lessee, it is as if we are assuming there is
noooooo residual value at all
Sales-Type Lease correct answers Lessor. Based on the manufacturer's/dealer's gross profit/loss.
Lessor records the the sales price of the asset, the cost of goods sold, related inventory reduction
and the lease receivable
Lease Receivable correct answers Also referred to as Net Investment. Present value of the
minimum lease payments plus the present value of any unguaranteed residual value. Includes the
present value of the residual value, whether guaranteed or not/
Sales Price of the Asset correct answers Present value of the minimum lease payments
Cost of Goods Sold correct answers Cost of the asset to the lessor, less the present value of any
un-guaranteed residual value
Initial Direct Costs correct answers Have two types: incremental and internal
Incremental Direct Costs correct answers Paid to independent third parties for originating a lease
arrangement. EX=cost of independent appraisal of collateral used to secure a lease.
Internal Direct Costs correct answers Directly related to specific activities performed by the
lessor on a given lease. EX=evaluating the prospective lessee's financial condition
Internal Indirect Costs correct answers Activities performed for advertising, servicing existing
leases
