CHAPTER 15 Leases 905 c. $34,100 d. $30,000 International Financial Reporting Standards are tested on the CPA exam along with U.S. GAAP. The following questions deal with the application of IFRS in accounting for leases. 9. For companies that prepare their financial statements in accordance with both U.S. GAAP and IFRS, a lease is deemed to be a capital lease (usually called a finance lease under IFRS) if substantially all risks and rewards of ownership are transferred. In making this distinction, less judgment, more specificity is applied using a. IFRS. b. U.S. GAAP. c. Either U.S. GAAP or IFRS. d. Neither U.S. GAAP nor IFRS. 10. Blue Company is recording a capital lease (usually called a finance lease under IFRS) and is aware that the implicit interest rate used by the lessor to calculate lease payments is 8%. Blue’s incremental borrowing rate is 7%. Blue should record the leased asset and lease liability at the present value of the lease payments discounted at a. 7% if using either U.S. GAAP or IFRS. b. 7% if using IFRS. c. 8% if using U.S. GAAP. d. 8% if using IFRS. 11. When a sale-leaseback transaction occurs, if the leaseback is considered to be an operating lease, and the lease payments and sales price are at fair value, any gain on the sale a. Is amortized over the lease term by a company using IFRS. b. Is recognized immediately by a company using IFRS. c. Is amortized over the lease term by a company using either U.S. GAAP or IFRS. d. Is not recorded by a company using IFRS. The following questions dealing with leases are adapted from questions that previously appeared on Certified Management Accountant (CMA) examinations. The CMA designation sponsored by the Institute of Management Accountants (www.imanet.org) provides members with an objective measure of knowledge and competence in the field of management accounting. Determine the response that best completes the statements or questions. 1. For a direct-financing lease, the gross investment of the lessor is equal to the a. Present value of the minimum lease payments minus the unguaranteed residual value accruing to the lessor at the end of the lease term. b. Lower of 90% of the present value of the minimum lease payments or the fair value of the leased asset. c. Difference between the fair value of the leased asset and the deferred interest revenue. d. Minimum lease payments plus the unguaranteed residual value accruing to the lessor at the end of the lease term. 2. Howell Corporation, a publicly traded corporation, is the lessee in a leasing agreement with Brandon Inc. to lease land and a building. If the lease contains a bargain purchase option, Howell should record the land and the building as a(n) a. Operating lease and capital lease, respectively. b. Capital lease and operating lease, respectively. c. Capital lease but recorded as a single unit. d. Capital lease but separately classified. 3. Initial direct costs incurred by the lessor under a sales-type lease should be a. Deferred and allocated over the economic life of the leased property. b. Expensed in the period incurred. c. Deferred and allocated over the term of the lease in proportion to the recognition of rental income. d. Added to the gross investment in the lease and amortized over the term of the lease as a yield adjustment. IFRS ● LO15–11 ● LO15–1 ● LO15–1 CPA Exam Questions ● LO15–5 ● LO15–7 ● LO15–9
Spiceland_Inter_Accounting8e_Ch15
To see the actual publication please follow the link above