Test Bank for Intermediate Accounting, 2026-2027 Release by David Spiceland | Chapter 15
A contractual arrangement in which an owner provides a lease
user the right to use an asset for a specified period of time
is called a(n) ?. (Enter one word per blank)
In which of the following ways can a lease be accounted As a purchase/sale agreement with debt financing.
for? (Select all that apply.) As a rental agreement.
Match each lease with its description. Operating = Rights and responsibilities of ownership are retained by the lessor.
Finance or sales-type = Rights and responsibilities of ownership are transferred to
the lessee.
The two basic lease classifications by a lessor are: operating and sales-type.
A contract in which an owner provides a user the right to lease
use an asset in return for periodic cash payments over a
period of time is called a(n):
Which of the following are possible reasons for leasing an tax benefits
asset rather than purchasing an asset? (Select all that insufficient cash flow
apply) fear of obsolescence
lower periodic payments on the asset
Depending on the nature of the leasing arrangement, a as a rental or a purchase/sale.
lease is accounted for:
A lease in which the rights and responsibilities of operating
ownership are retained by the lessor is called a(n) ? lease.
The two basic lease classifications by a lessee are: operating and finance.
A lease is a contractual agreement by which a(n) ? Lessor, lessee
provides a(n) ? the right to use an asset for a specified
period of time.
Lease payments are often ? than installment payments. less
The rights granted to a lessee under a finance lease are not
________ the same as those granted to a company that
purchases an asset.
When the rights and responsibilities of ownership are operating
retained by the lessor, the lease is classified as a(n)
______ lease.
Which of the following occur in a lease? Lessee pays the lessor periodic cash payments.
Contractual agreement.
Lessee has the right to use an asset for a specified period of time.
, Test Bank for Intermediate Accounting, 2026-2027 Release by David Spiceland | Chapter 15
Corr Inc. leases equipment from LM Leasing Corp. The finance lease
lease requires rental payments of $20,000 per year for 5
years. Title of the property transfers at the end of the lease
term. The equipment has a useful life of 10 years. How
should the lease be classified by Corr?
From an accounting standpoint, legal ownership of a irrelevant
leased asset is _____ to the accounting method used.
Which one of the following will determine classification of a The asset is of a very specialized nature and will have no alternative use to the
lease transaction as a finance lease? lessor.
Lease accounting guidance suggests that a "major part" of remaining economic life.
the leased asset's life is 75% or more of the:
A contractual arrangement in which an owner provides a Lease
user the right to use an asset for a specified period of time
is called a(n) ? . (Enter one word per blank)
Periods covered by renewal options: are not included in the lease term if a bargain purchase option is present.
Selma leases equipment from ABC Corp. The 4-year lease operating
requires payments of $10,000 per year, beginning at the
inception of the lease. The fair value of the equipment at
the inception of the lease is $100,000. The equipment has
a 6-year life. Selma's incremental borrowing rate is 6%.
The lease does not transfer title and does not have a
bargain purchase option. How should the lease be
classified by Selma?
Which of the following are criteria for classification as a The present value of the total lease payments is greater than substantially all of the
finance lease? (Select all that apply.) fair value of the asset.
Ownership of the asset transfers to the lessee.
The lease includes a purchase option the lessee is reasonably certain to exercise.
A reasonable conclusion is that the "major part" of the 75% or more
leased asset's life is included in the lease, if _____ of the
remaining economic life of the asset is covered by the
lease term.
True or false: When a bargain purchase option exists, a True
renewal option is considered irrelevant because it is
assumed that the purchase option will be exercised.
A reasonable conclusion is that _____ of the fair value of 90% or more
the asset amounts to "substantially all" of the fair value.
If a leased asset is of a very specialized nature and has no only the lessee receives the risks and rewards of ownership.
alternative use to the lessor at the end of the lease term,
(Select all that apply.) it is accounted for as a finance lease.
The accounting in which of the following parallels that of Finance lease
an installment purchase?
A contractual arrangement in which an owner provides a lease
user the right to use an asset for a specified period of time
is called a(n) ?. (Enter one word per blank)
In which of the following ways can a lease be accounted As a purchase/sale agreement with debt financing.
for? (Select all that apply.) As a rental agreement.
Match each lease with its description. Operating = Rights and responsibilities of ownership are retained by the lessor.
Finance or sales-type = Rights and responsibilities of ownership are transferred to
the lessee.
The two basic lease classifications by a lessor are: operating and sales-type.
A contract in which an owner provides a user the right to lease
use an asset in return for periodic cash payments over a
period of time is called a(n):
Which of the following are possible reasons for leasing an tax benefits
asset rather than purchasing an asset? (Select all that insufficient cash flow
apply) fear of obsolescence
lower periodic payments on the asset
Depending on the nature of the leasing arrangement, a as a rental or a purchase/sale.
lease is accounted for:
A lease in which the rights and responsibilities of operating
ownership are retained by the lessor is called a(n) ? lease.
The two basic lease classifications by a lessee are: operating and finance.
A lease is a contractual agreement by which a(n) ? Lessor, lessee
provides a(n) ? the right to use an asset for a specified
period of time.
Lease payments are often ? than installment payments. less
The rights granted to a lessee under a finance lease are not
________ the same as those granted to a company that
purchases an asset.
When the rights and responsibilities of ownership are operating
retained by the lessor, the lease is classified as a(n)
______ lease.
Which of the following occur in a lease? Lessee pays the lessor periodic cash payments.
Contractual agreement.
Lessee has the right to use an asset for a specified period of time.
, Test Bank for Intermediate Accounting, 2026-2027 Release by David Spiceland | Chapter 15
Corr Inc. leases equipment from LM Leasing Corp. The finance lease
lease requires rental payments of $20,000 per year for 5
years. Title of the property transfers at the end of the lease
term. The equipment has a useful life of 10 years. How
should the lease be classified by Corr?
From an accounting standpoint, legal ownership of a irrelevant
leased asset is _____ to the accounting method used.
Which one of the following will determine classification of a The asset is of a very specialized nature and will have no alternative use to the
lease transaction as a finance lease? lessor.
Lease accounting guidance suggests that a "major part" of remaining economic life.
the leased asset's life is 75% or more of the:
A contractual arrangement in which an owner provides a Lease
user the right to use an asset for a specified period of time
is called a(n) ? . (Enter one word per blank)
Periods covered by renewal options: are not included in the lease term if a bargain purchase option is present.
Selma leases equipment from ABC Corp. The 4-year lease operating
requires payments of $10,000 per year, beginning at the
inception of the lease. The fair value of the equipment at
the inception of the lease is $100,000. The equipment has
a 6-year life. Selma's incremental borrowing rate is 6%.
The lease does not transfer title and does not have a
bargain purchase option. How should the lease be
classified by Selma?
Which of the following are criteria for classification as a The present value of the total lease payments is greater than substantially all of the
finance lease? (Select all that apply.) fair value of the asset.
Ownership of the asset transfers to the lessee.
The lease includes a purchase option the lessee is reasonably certain to exercise.
A reasonable conclusion is that the "major part" of the 75% or more
leased asset's life is included in the lease, if _____ of the
remaining economic life of the asset is covered by the
lease term.
True or false: When a bargain purchase option exists, a True
renewal option is considered irrelevant because it is
assumed that the purchase option will be exercised.
A reasonable conclusion is that _____ of the fair value of 90% or more
the asset amounts to "substantially all" of the fair value.
If a leased asset is of a very specialized nature and has no only the lessee receives the risks and rewards of ownership.
alternative use to the lessor at the end of the lease term,
(Select all that apply.) it is accounted for as a finance lease.
The accounting in which of the following parallels that of Finance lease
an installment purchase?
