WGU D030 Task 2: Nursing Service Line for In-
Home and Hospice Services | 2025 Latest Update
with complete solutions.
What is a major reason why a company may become involved in leasing to
other companies? - answer-Tax incentives
Which of the following best describes current practice in accounting for leases?
- answer-All long-term leases are capitalized
What single lease expense is recognized on the income statement? - answer-
An operating lease
In computing present value of the lease payments, what rate should the lessee
use? - answer-Use the implicit rate of the lessor, assuming that the implicit
rate is known to the lessee
A start-up company is trying to decide if it should purchase or lease cellular
phones for its 2,500 new employees. Which decision should the company
make? - answer-Lease, because leasing can pass the risk of residual value to
the lessor
,Company A leases cars from Company B for their salespeople. The leases are
for three years. Company A paid a commission to a third party for helping to
negotiate the leases from Company B. How should Company A account for this
commission? - answer-Include the commission in the amount for the right-of-
use asset but not in the lease liability
Company A leases computers from Company B with annual payments of
$6,469. The leases are for two years, and the computers have an economic life
of three years. At the end of the lease, the computers are expected to have a
residual value of $5,000. Company A has an option to purchase the computers
for $2,000 at the end of the lease agreement, which it expects to do. The fair
value of the lease is $15,000, and the present value of the lease is $12,689. The
present value of the option to purchase the computers is $1,849. How should
Company A account for the amortization of the computers due to the bargain
purchase option? - answer-It should amortize $14,538 using the economic life
of the computers
Which two finance lease elements are a part of each lease payment? - answer-
A reduction of the lease liability and the financing cost (interest expense)
Company A agrees to lease racks to Company B for five years. The expected
economic life of the racks are five years. At the end of the lease, Company B
has the right to purchase the racks for $5,000, but the company is not certain it
will exercise the right. Which test does the lease pass to be classified as a
finance lease? - answer-Lease term
A lessor leases a piece of equipment to a lessee, under lease terms that qualify
as an operating lease. The present value of required rental payments is
$280,000; and the present value of the estimated residual value, which is
unguaranteed, is $30,000. The lessor incurred total costs of $160,000 to build
,the leased asset. Which amount of lease receivable, if any, should the lessor
record? - answer-$0
A company wishes to avoid classifying a lease as a finance lease. Which
criterion will prevent the company from reaching this goal? - answer-There is a
bargain price option.
A company is looking for additional guidance on which equipment to lease. The
company is using a lessor that has knowledge about the parent's product that
can be passed on to the company. Which lessor is being used by the lessee? -
answer-Captive leasing companies
Company A leases computers from Company B with annual payments of
$6,469. The leases are for two years, and the computers have an economic life
of three years. At the end of the lease, the computers are expected to have a
residual value of $5,000. Company A has an option to purchase the computers
for $2,000 at the end of the lease agreement, which it expects to do. The fair
value of the lease is $15,000, and the present value of the lease is $12,689. The
present value of the option to purchase the computers is $1,849. How does
Company A account for the amortization of the computers due to the bargain
purchase option? - answer-It will amortize $14,538 using the economic life of
the computers.
Which two finance lease elements are a part of each lease payment? - answer-
A reduction of the lease liability and the financing cost (interest expense)
, Company A agrees to lease racks to Company B for five years. The expected
economic life of the racks are five years. At the end of the lease, Company B
has the right to purchase the racks for $5,000, but the company is not certain it
will exercise the right. Which test must the lease pass to be classified as a
finance lease? - answer-Lease term
Company A (lessee) has reached an operating lease agreement with Company
B (lessor) to lease a new boom lift beginning January 1, Year 1. The lease
agreement contains no renewal options and contains the following
information:
- The lease is for three years, requiring annual payments at the beginning of
the year of $10,213.
- The boom lift has a cost and fair value at the beginning of the lease of
$40,000; an estimated economic life of five years; and a non-guaranteed
residual value of $12,500.
- Present value of the residual value is $10,798.
- Company B depreciates assets like the boom lift using straight-line
depreciation.
What is the depreciation expense for Year 2 that the lessor will record? -
answer-$8,000
$8,000 = $40,. Company B uses the straight-line depreciation method to
depreciate assets. The cost of the boom lift is $40,000, and the economic life is
five years.
Home and Hospice Services | 2025 Latest Update
with complete solutions.
What is a major reason why a company may become involved in leasing to
other companies? - answer-Tax incentives
Which of the following best describes current practice in accounting for leases?
- answer-All long-term leases are capitalized
What single lease expense is recognized on the income statement? - answer-
An operating lease
In computing present value of the lease payments, what rate should the lessee
use? - answer-Use the implicit rate of the lessor, assuming that the implicit
rate is known to the lessee
A start-up company is trying to decide if it should purchase or lease cellular
phones for its 2,500 new employees. Which decision should the company
make? - answer-Lease, because leasing can pass the risk of residual value to
the lessor
,Company A leases cars from Company B for their salespeople. The leases are
for three years. Company A paid a commission to a third party for helping to
negotiate the leases from Company B. How should Company A account for this
commission? - answer-Include the commission in the amount for the right-of-
use asset but not in the lease liability
Company A leases computers from Company B with annual payments of
$6,469. The leases are for two years, and the computers have an economic life
of three years. At the end of the lease, the computers are expected to have a
residual value of $5,000. Company A has an option to purchase the computers
for $2,000 at the end of the lease agreement, which it expects to do. The fair
value of the lease is $15,000, and the present value of the lease is $12,689. The
present value of the option to purchase the computers is $1,849. How should
Company A account for the amortization of the computers due to the bargain
purchase option? - answer-It should amortize $14,538 using the economic life
of the computers
Which two finance lease elements are a part of each lease payment? - answer-
A reduction of the lease liability and the financing cost (interest expense)
Company A agrees to lease racks to Company B for five years. The expected
economic life of the racks are five years. At the end of the lease, Company B
has the right to purchase the racks for $5,000, but the company is not certain it
will exercise the right. Which test does the lease pass to be classified as a
finance lease? - answer-Lease term
A lessor leases a piece of equipment to a lessee, under lease terms that qualify
as an operating lease. The present value of required rental payments is
$280,000; and the present value of the estimated residual value, which is
unguaranteed, is $30,000. The lessor incurred total costs of $160,000 to build
,the leased asset. Which amount of lease receivable, if any, should the lessor
record? - answer-$0
A company wishes to avoid classifying a lease as a finance lease. Which
criterion will prevent the company from reaching this goal? - answer-There is a
bargain price option.
A company is looking for additional guidance on which equipment to lease. The
company is using a lessor that has knowledge about the parent's product that
can be passed on to the company. Which lessor is being used by the lessee? -
answer-Captive leasing companies
Company A leases computers from Company B with annual payments of
$6,469. The leases are for two years, and the computers have an economic life
of three years. At the end of the lease, the computers are expected to have a
residual value of $5,000. Company A has an option to purchase the computers
for $2,000 at the end of the lease agreement, which it expects to do. The fair
value of the lease is $15,000, and the present value of the lease is $12,689. The
present value of the option to purchase the computers is $1,849. How does
Company A account for the amortization of the computers due to the bargain
purchase option? - answer-It will amortize $14,538 using the economic life of
the computers.
Which two finance lease elements are a part of each lease payment? - answer-
A reduction of the lease liability and the financing cost (interest expense)
, Company A agrees to lease racks to Company B for five years. The expected
economic life of the racks are five years. At the end of the lease, Company B
has the right to purchase the racks for $5,000, but the company is not certain it
will exercise the right. Which test must the lease pass to be classified as a
finance lease? - answer-Lease term
Company A (lessee) has reached an operating lease agreement with Company
B (lessor) to lease a new boom lift beginning January 1, Year 1. The lease
agreement contains no renewal options and contains the following
information:
- The lease is for three years, requiring annual payments at the beginning of
the year of $10,213.
- The boom lift has a cost and fair value at the beginning of the lease of
$40,000; an estimated economic life of five years; and a non-guaranteed
residual value of $12,500.
- Present value of the residual value is $10,798.
- Company B depreciates assets like the boom lift using straight-line
depreciation.
What is the depreciation expense for Year 2 that the lessor will record? -
answer-$8,000
$8,000 = $40,. Company B uses the straight-line depreciation method to
depreciate assets. The cost of the boom lift is $40,000, and the economic life is
five years.
