Accounting unit 8

·

After reading the information on accounting for leases in Chapter 15 from your

Intermediate Accounting

text, use a Word or an Excel document to complete the

following exercise and address the following problems:

o

E 15

-

35,

"Concepts; Terminology," page 883.

§

This exercise focuses on lease concepts and terminology.

o

P 15

-

2, "Finance Lease," page 884.

§

Prepare and analyze transactions related to finance leases.

o

P 15

-

5, "Lessee; Operating Lease; Advance Payment; Leasehold Improv

ement,"

page 885.

§

The problem tests your knowledge of operating leases.

E 15

–

35

Concepts; terminology

•

LO15

–

2 through LO15

–

8

Prepare the appropriate entries for the lessor from the beginning of the lease through the end of

the lease term.

Listed below are several terms and phrases associated with leases. Pair each item from List A

with the item from List B (by letter) that is mo

st appropriately associated with it.

List A

List B

·

1. Effective rate times balance

·

2. Revenue recognition issues

·

3. Lease payments plus residual value

·

4. Periodic lease payments plus excess lessee

-

guaranteed residual value

·

5. PV of lease payments plus PV of residual

value

·

6. Initial direct costs

·

7. Rent revenue

·

8. Purchase option

·

9. Leasehold improvements

·

10. Cash expected to satisfy residual value

guarantee

·

11. Finance lease expense

·

12. Deducted in lessor’s computation of lease

payments

·

13. Title transfers to lessee

·

14. Contingent rentals

a.

PV of purchase option

exercise price

b.

Lessor’s net investment

c.

Lessor’s gross investment

d.

Operating lease

e.

Depreciable assets

f.

Component of lease pa

yments

g.

Nonlease payments

h.

Depreciation longer than lease

term

i.

Disclosure only

j.

Interest expense

k.

Control passed to lessee

l.

Lessee’s lease payments

m.

Might shorten lease term

n.

Sales

-

type lease selling

expense

 After reading the information on accounting for leases in Chapter 15 from your

Intermediate Accounting text, use a Word or an Excel document to complete the

following exercise and address the following problems:

o E 15-35, "Concepts; Terminology," page 883.

 This exercise focuses on lease concepts and terminology.

o P 15-2, "Finance Lease," page 884.

 Prepare and analyze transactions related to finance leases.

o P 15-5, "Lessee; Operating Lease; Advance Payment; Leasehold Improvement,"

page 885.

 The problem tests your knowledge of operating leases.

E 15–35

Concepts; terminology

• LO15–2 through LO15–8

Prepare the appropriate entries for the lessor from the beginning of the lease through the end of

the lease term.

Listed below are several terms and phrases associated with leases. Pair each item from List A

with the item from List B (by letter) that is most appropriately associated with it.

List A List B

 1. Effective rate times balance

 2. Revenue recognition issues

 3. Lease payments plus residual value

 4. Periodic lease payments plus excess lessee-

guaranteed residual value

 5. PV of lease payments plus PV of residual

value

 6. Initial direct costs

 7. Rent revenue

 8. Purchase option

 9. Leasehold improvements

 10. Cash expected to satisfy residual value

guarantee

 11. Finance lease expense

 12. Deducted in lessor’s computation of lease

payments

 13. Title transfers to lessee

 14. Contingent rentals

a. PV of purchase option

exercise price

b. Lessor’s net investment

c. Lessor’s gross investment

d. Operating lease

e. Depreciable assets

f. Component of lease payments

g. Nonlease payments

h. Depreciation longer than lease

term

i. Disclosure only

j. Interest expense

k. Control passed to lessee

l. Lessee’s lease payments

m. Might shorten lease term

n. Sales-type lease selling

expense