Study guide_quiz 2

Study guide_quiz 2 - Study Guide for Quiz 2 Leases-Chapter...

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Study Guide for Quiz 2 Leases-Chapter 15 Economic definition of a lease o Understand key terms of lease Useful life (economic life) Residual at the end of useful life Lease term Residual at the end of lease term BPO Guaranteed residual vs unguaranteed residual Lessee’s incremental borrowing cost Lessor’s implicit rate Advantages of leasing Criteria for lease capitalization. Know what they are and what each means. Be able to apply to determine whether to capitalize or not Understand what types of payments are included in the minimal lease payments, and which ones are not (e.g. executory costs) Compute present value of minimum lease payments. Make sure you understand the difference between present value factor for ordinary annuity and annuity due. Be able to record lease accounting journal entries from perspective of both lessor and lessee Be able to construct lease amortization schedule for lessee and lessor o Understand that you will need two amortization tables, one for lessee and one for lessor, when there is unguaranteed residual Understand how to record depreciation on capitalized lease
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Study guide_quiz 2 - Study Guide for Quiz 2 Leases-Chapter...

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