Ch 21 - Name: Status : Score: Instructions: Test Accounting...

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Name: Test Accounting for Leases --- Stec Status : Completed Score: 170 out of 200 points Instructions: Question 1 Multiple Choice 10 of 10 points When the lessee agrees to make up any deficiency below a stated amount that the lessor realizes in residual value, that stated amount is the guaranteed residual value. Selected Answer: True Question 2 Multiple Choice 10 of 10 points In order to properly record a direct-financing lease, the lessor needs to know how to calculate the lease receivable. The lease receivable in a direct-financing lease is best defined as Selected Answer: the present value of minimum lease payments. Question 3 Multiple Choice 10 of 10 points Companies must periodically review the estimated unguaranteed residual value in a sales-type lease. Selected Answer: True Question 4 Multiple Choice 10 of 10 points Estes Co. leased a machine to Dains Co. Assume the lease payments were made on the basis that the residual value was guaranteed and Estes gets to recognize all the profits, and at the end of the lease term, before the lessee transfers the asset to the lessor, the leased asset and obligation accounts have the following balances: If, at the end of the lease, the fair market value of the residual value is $8,800, what gain or loss should Estes record? Selected Answer: $7,200 loss Question 5 Multiple Choice 0 of 10 points On January 1, 2008, Carley Corporation signed a five-year noncancelable lease for equipment. The terms of the lease called for Carley to make annual payments of $60,000 at the end of each year for five years with title to pass to Carley at the end of this period. The equipment has an estimated useful life of 7 years and no salvage value. Carley uses the straight-line method of depreciation for all of its fixed assets. Carley accordingly accounts for this lease transaction as a capital lease. The minimum lease payments were determined to have a present value of $227,448 at an effective interest rate of 10%. With respect to this capitalized lease, for 2009 Carley should record Selected Answer: interest expense of $22,745 and depreciation expense of $32,493. Question 6 Multiple Choice 10 of 10 points A benefit of leasing to the lessor is the return of the leased property at the end of the lease term.
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Selected Answer: True Question 7 Multiple Choice 10 of 10 points In computing depreciation of a leased asset, the lessee should subtract Selected Answer: a guaranteed residual value and depreciate over the term of the lease. Question 8 Multiple Choice
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This note was uploaded on 09/21/2008 for the course ACC 202 taught by Professor Stec during the Spring '08 term at Community College of Allegheny County.

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Ch 21 - Name: Status : Score: Instructions: Test Accounting...

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