(3 points) This is a sales-type lease to lessor because: Question 17 options: Th

ID: 2398503 • Letter: #

Question

(3 points)

This is a sales-type lease to lessor because:

Question 17 options:

The present value of the minimum lease payments is bigger than 90% of the fair value of the leased property

The collectibility of the payments is reasonably predictable and lessor's performance is complete.

The fair value of the leased asset is bigger than the book value of the leased asset on lessor's book.

All of the above.

Question 18 (3 points)

To capitalize this lease transaction, lessee should

Question 18 options:

Debit an asset account and credit a shareholders' equity account.

Debit a shareholders' equity account and credit an asset account.

Debit an asset account and credit a liability account.

Debit a liability account and credit an asset account.

The present value of the minimum lease payments is bigger than 90% of the fair value of the leased property

The collectibility of the payments is reasonably predictable and lessor's performance is complete.

The fair value of the leased asset is bigger than the book value of the leased asset on lessor's book.

All of the above.

Solution :

This is a saled type lease to lessor because, fair value of leased asset is bigger than book value of the leased asset in lessor book.

Hence 3rd option is correct.

Solution 18:

To capitalize the lease transaction lessee should, "Debit an asset account and credit a liability account"

Hence 3rd option is correct.

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