WGU D105
Intermediate Accounting III
OA2 (Units 5-9)
Actual Questions with Verified Answers
Pass the Exam with Confidence
What You Will Get:
➢172 OA Exam Questions w/ Answers
➢Complete Units 5, 6, 7, 8, and 9
➢Expert Rationales Included
Take and pass the OA :)
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After Purchase
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,1. Wh
hat is included in the present value for the lease receivable amount?
A. Rental payments only
B. Rental payments plus the present value of guaranteed and unguaranteed residual
values
C. Executory costs and overhead only
D. The historical cost of the leased property only
CORRECT ANSWER:
E
B. Rental payments plus the present value of guaranteed and unguaranteed residual
values
Expert Rationale:
The lessor’s net investment includes the present value of contractual lease payments
and the expected residual interest in the asset. General overhead is not part of the lease
receivable.
2. Wh
hich of the following is a correct statement of one of the classification tests?
A. The lease term is always less than 50% of the asset’s life
B. Ownership must remain with the lessee
C. The lease term is equal to or more than 75% of the estimated economic life of the
leased property
D. The asset must have an unlimited useful life
CORRECT ANSWER:
E
C. The lease term is equal to or more than 75% of the estimated economic life of the
leased property
Expert Rationale:
The course material uses the traditional 75% guideline to determine whether the lease
covers a major portion of the asset’s economic life. Meeting this threshold supports
finance-lease classification.
, 3. A lessee had a ten-year finance lease requiring equal annual payments. Wh
hat should
the reduction of the lease liability in Year 2 be equal to?
A. Total lease expense reported in Year 1
B. The Year 2 amortization expense
C. The interest expense recognized in Year 2
D. The current liability shown for the lease at the end of Year 1
CORRECT ANSWER:
E
D. The current liability shown for the lease at the end of Year 1
Expert Rationale:
The current portion of the lease liability represents the principal expected to be repaid
during the following year. Therefore, the current amount reported at the end of Year 1
equals the expected Year 2 principal reduction.
4. Wh
hat is the amount to be recorded as the cost of an asset under a finance lease equal
to?
A. Present value of the lease payments
B. Total undiscounted payments
C. The lessor’s original historical cost
D. Future interest plus residual value
CORRECT ANSWER:
E
A. Present value of the lease payments
Expert Rationale:
The leased asset and corresponding liability are initially measured using the present
value of required lease payments. Appropriate adjustments may then be made for
incentives, prepayments, and initial direct costs.
5. Wh
hat is a major reason why a company may become involved in leasing to other
companies?
A. Tax incentives
B. Reduced financial reporting
Intermediate Accounting III
OA2 (Units 5-9)
Actual Questions with Verified Answers
Pass the Exam with Confidence
What You Will Get:
➢172 OA Exam Questions w/ Answers
➢Complete Units 5, 6, 7, 8, and 9
➢Expert Rationales Included
Take and pass the OA :)
, PREVIEW ACCESS
Preview Pages
Below
Get the Complete PDF
After Purchase
If you require further clarification or in need of any study
i
resources, feel free to Message me.
,1. Wh
hat is included in the present value for the lease receivable amount?
A. Rental payments only
B. Rental payments plus the present value of guaranteed and unguaranteed residual
values
C. Executory costs and overhead only
D. The historical cost of the leased property only
CORRECT ANSWER:
E
B. Rental payments plus the present value of guaranteed and unguaranteed residual
values
Expert Rationale:
The lessor’s net investment includes the present value of contractual lease payments
and the expected residual interest in the asset. General overhead is not part of the lease
receivable.
2. Wh
hich of the following is a correct statement of one of the classification tests?
A. The lease term is always less than 50% of the asset’s life
B. Ownership must remain with the lessee
C. The lease term is equal to or more than 75% of the estimated economic life of the
leased property
D. The asset must have an unlimited useful life
CORRECT ANSWER:
E
C. The lease term is equal to or more than 75% of the estimated economic life of the
leased property
Expert Rationale:
The course material uses the traditional 75% guideline to determine whether the lease
covers a major portion of the asset’s economic life. Meeting this threshold supports
finance-lease classification.
, 3. A lessee had a ten-year finance lease requiring equal annual payments. Wh
hat should
the reduction of the lease liability in Year 2 be equal to?
A. Total lease expense reported in Year 1
B. The Year 2 amortization expense
C. The interest expense recognized in Year 2
D. The current liability shown for the lease at the end of Year 1
CORRECT ANSWER:
E
D. The current liability shown for the lease at the end of Year 1
Expert Rationale:
The current portion of the lease liability represents the principal expected to be repaid
during the following year. Therefore, the current amount reported at the end of Year 1
equals the expected Year 2 principal reduction.
4. Wh
hat is the amount to be recorded as the cost of an asset under a finance lease equal
to?
A. Present value of the lease payments
B. Total undiscounted payments
C. The lessor’s original historical cost
D. Future interest plus residual value
CORRECT ANSWER:
E
A. Present value of the lease payments
Expert Rationale:
The leased asset and corresponding liability are initially measured using the present
value of required lease payments. Appropriate adjustments may then be made for
incentives, prepayments, and initial direct costs.
5. Wh
hat is a major reason why a company may become involved in leasing to other
companies?
A. Tax incentives
B. Reduced financial reporting
