5th Long Exam - University of San Carlos School of Business...

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University of San Carlos School of Business and Economics Department of Accountancy AC 506 Fifth Long Exam Name: __________________________________________________ Schedule: ___________________ INSTRUCTIONS: Write all your FINAL answers in the answer sheet. Refer to the instructions for each particular type of examination. Refrain from talking to your seatmates, as such will be construed as cheating. Make your handwriting legible. NO ERASURES ALLOWED. I. IDENTIFICATION (n x 1). Determine the term that is defined by the following numbers. 1. A lease that does not transfer substantially all the risks and rewards incident to the ownership of an asset. 2. It is the date from which the lessee is entitled to exercise its right to use the leased asset. 3. The party who depreciates the asset under an operating lease. 4. The portion of the lease payment that is not fixed in amount but is based on a factor other than just the passage of time 5. It is equal to the gross rentals for the entire lease term plus the absolute amount of the residual value, whether guaranteed or unguaranteed. 6. It is an arrangement whereby one party sells a property to another party and then immediately leases the property back from its new owner. 7. It Is the present value of any economic benefits available in the form of refunds from the plan or reductions in future contributions to the plan. 8. The best estimate of the variables that will determine the ultimate cost of providing postemployment benefits. 9. It is a transaction that eliminates all further legal or constructive obligations for part or all of the benefits provided under a defined benefit plan. 10. Employee benefits provided in exchange for the termination of an employee’s employment as a result of either an entity’s decision to terminate an employee’s employment before the normal retirement date or an employee’s decision to accept an offer of benefits in exchange for the termination of employment. II. TRUE OR FALSE (n x 1). Write TRUE if the statement is correct and FALSE if otherwise. 1. Any security deposit refundable upon the lease expiration shall be accounted for as a receivable by the lessor. 2. Any initial direct costs incurred by a lessee are added to the amount of the liability recognized in the statement of financial position. 3. In a direct financing lease, unearned interest income should be amortized over the lease term using the effective interest method. 4. In sales type lease, initial direct costs are expensed as component of cost of sales. 5. If the sale and leaseback transaction results in an operating lease that is clearly established at fair value, any gain or loss on sale is recognized immediately in profit or loss. 6. Vesting paid absences are those that are carried forward and can be used in future periods if the current period’s entitlement is not used in full.
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