Chapter 15

1. 1GAAP requires that some lease agreements be accounted for as purchases of assets. The theoretical justification for this treatment is that a lease of this type:  

   1. AComplies with the concept of form over substance.
   2. BReflects the relationship of cause and effect.
   3. CSatisfies the concept of historical cost.
   4. DConveys most of the benefits of property ownership.
2. 2From the perspective of the lessee, leases may be classified as either:  

   1. ASales-type without selling profit or sales-type with selling profit.
   2. BFinance or sales-type without selling profit.
   3. CFinance or operating.
   4. DSales-type or operating.
3. 3From the perspective of the lessor, two possible lease classifications are:  

   1. AFinancing or sales-type.
   2. BOperating or financing.
   3. CSales-type or indirect financing.
   4. DOperating or sales-type.
4. 4Distinguishing between operating and finance leases is due in large part to the accounting concept of:  

   1. AConservatism.
   2. BMateriality.
   3. CSubstance over form.
   4. DHistorical cost.
5. 5When the total expenses over the life of an operating lease are compared to the total expenses over the life of a finance lease, one will find that:  

   1. AThe expenses of a finance lease are greater than the expenses of the operating lease.
   2. BThe expenses of the finance lease and operating lease are equal.
   3. CThe expenses of an operating lease are greater than the expenses of a finance lease.
   4. DNo meaningful comparison can be made.
6. 6The five criteria provided in GAAP for distinguishing a finance lease from an operating lease do not include:
   

   1. AThe agreement specifies that ownership transfers at the end of the lease term.
   2. BThe collectibility of the lease payments must be reasonably predictable.
   3. CThe agreement grants the lessee an option to purchase the underlying asset that the lessee is reasonably certain to exercise.
   4. DThe noncancelable lease term is for the major part of the remaining economic life of the leased asset.
7. 7One of the five criteria for a finance lease specifies that the lease term be equal to or greater than:  

   1. Athe major part of the remaining economic life of the leased property.
   2. Bthe entire amount of the remaining economic life of the leased property.
   3. Ca meaningful part of the remaining economic life of the leased property.
   4. Da non-insignificant part of the remaining economic life of the leased property.
8. 8One of the five criteria for a finance lease specifies that the present value of the lease payments be equal to or greater than:  

   1. Asubstantially all of the cost of the asset.
   2. Bthe major part of the fair value of the asset.
   3. Csubstantially all of the fair value of the asset.
   4. Dthe major part of the cost of the asset.
9. 9For the lessee to account for a lease as a finance lease, the lease must meet:  

   1. AAll five of the criteria specified by GAAP regarding accounting for leases.
   2. BAny one of the six criteria specified by GAAP regarding accounting for leases.
   3. CAny two of the criteria specified by GAAP regarding accounting for leases.
   4. DAny one of the five criteria specified by GAAP regarding accounting for leases.
10. 10For the lessor to account for a lease as a sales-type lease, the lease must meet:  

    1. AAny one of first five classification criteria and both of the last two additional conditions specified by GAAP regarding accounting for leases.
    2. BMore than one of the five criteria specified by GAAP regarding accounting for leases.
    3. CAll five of the criteria specified by GAAP regarding accounting for leases.
    4. DAny one of the five criteria specified by GAAP regarding accounting for leases.

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Accounting Quiz on Chapter 15, created by Tangheng Zheng on 25/07/2018.

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Tangheng Zheng

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