1.Major reasons why a company may become involved in leasing to other companies is (are) a.Interest revenue b.High residual values c.Tax incentives d.All of these 2.The lease Liability account should be disclosed as a.All current liabilities b.All noncurrent liabilities c.Current portions in current liabilities and the remainders in noncurrent liabilities d.Deferred credits. 3.The lessor may classify leases in one of several lease types. Which is not one of the types: a.Sales-type leases b.Operating leases c.Direct-financing leases d.Capitalization leases. 4.A lessee had a ten-year capital lease requiring equal annual payments. The reduction of the lease liability in year 2 should equal: a.The current liability shown for the lease at the end of year 1. b.The current liability shown for the lease at the end of year 2. c.The reduction of the lease liability in year 1. d.One-tenth of the original lease liability. 5.Carey sold its headquarters building at a gain, and simultaneously leased back the building. The lease was reported as a capital lease. AT the time of the sale, the gain should be reported as a.Operating income b.An extraordinary item, net of income tax c.A separate component of stockholders’ equity d.A deferred gain.