ACC 312 WORKSHOP 5.2 QUESTIONS FOR REVIEW
Download Q 15-1 The basic concept of “substance over form” influences lease accounting. Explain. Q 15-3 How are leases and installment notes the same? How do they differ? Q 15-4 IASB chairman David Tweedie has noted that current GAAP allows airlines’ balance sheets to appear as if the companies don’t have airplanes. How can this be true? Q 15-5 A lessee should classify a lease transaction as a capital lease if it is noncancelable and one or more of four classification criteria are met. Otherwise, it is an operating lease. What are these criteria? Q 15-8 Can the present value of minimum lease payments differ between the lessor and the lessee? If so, how? Q 15-10 What are executory costs? How are they accounted for by the lessee in a capital lease when paid by the lessee? When paid by the lessor? Explain. Q 15-11 The discount rate influences virtually every amount reported in connection with a lease by both the lessor and the lessee. What is the lessor’s discount rate when determining the present value of minimum lease payments? What is the lessee’s discount rate? Q 15-13 The lessor’s initial direct costs often are substantial. What are initial direct costs? Q 15-22 Describe the primary differences between IFRS and U.S. GAAP in the way leases are classified as either operating or finance (capital) leases.