ACCT 305 Week 7 Quiz

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ACCT 305 Week 7 Quiz

 1.Question :(TCO 8) For the lessee to account for a lease as a capital lease, the lease must meet:
Student Answer: All four of the criteria specified by GAAP regarding accounting for leases.
 Any one of the six criteria specified by GAAP regarding accounting for leases.
 Any two of the criteria specified by GAAP regarding accounting for leases.
 Any one of the four criteria specified by GAAP regarding accounting for leases.

 

 2.Question :(TCO 8) From the perspective of the lessee, leases may be classified as either:
Student Answer: Direct financing or sales-type.
 Capital or direct financing.
 Capital or operating.
 Direct financing or operating.

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 3.Question :(TCO 8) Of the four criteria for a capital lease, the one that most often is the decisive criteria is:
Student Answer: The 75% of economic life test.
 The transfer of title.
 The 90% of fair value test.
 The bargain purchase option.

 

 4.Question :(TCO 8) On February 1, 2011, Pearson Corporation became the lessee of equipment under a five-year, noncancelable lease. The estimated economic life of the equipment is 8 years. The fair value of the equipment was $400,000. The lease does not meet the definition of a capital lease in terms of a bargain purchase option, transfer of title, or the lease term. However, Pearson must classify this as a capital lease if the present value of the minimum lease payments is at least
Student Answer: $400,000.
 $360,000.
 $400,000.
 $300,000.
 

 

 5.Question :(TCO 8) Recording a sales-type lease is similar to recording:
Student Answer: A purchase on account.
 An exchange of assets.
 A sale of a fixed asset.
 A sale of merchandise on account.

 

 

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