Chapter 15 Questions

Chapter 15 Questions - Emir Ibrahimovic ACC311 Chapter 15...

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Unformatted text preview: Emir Ibrahimovic ACC311 Chapter 15 Questions 15-1 The basic concept of “substance over form” influences lease accounting. Explain 15-3 How are leases and installment notes the same? How do they differ? 15-4 IASB chairman David Tweedie has noted that current GAAP allows airlines’ balance sheets to appear as if the companies don’t have airplanes. How can this be true? 15-5 A lessee should classify a lease transaction as a capital lease if it is noncancelable and one or more of four classification criteria are met. Otherwise, it is an operating lease. What are these criteria? 15-7 Lukawitz Industries leased equipment to Seminole Corporation for a four-year period, at which time possession of the leased asset will revert back to Lukawitz. The equipment cost Lukawitz $4 million and has an expected useful life of six years. Its normal sales price is $5.6 million. The present value of the minimum lease payments for both the lessor and lessee is $5.2 million. The first payment was made at the inception of the lease. Collectability of the remaining million....
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