2/23/2021
QUIZ - Lease: ACC C206-204A INTERMEDIATE ACCTG 2 & 3 T/F | 7:30AM-10:30AM
QUIZ - Lease
Due Feb 23 at 8:30am
Points 40
Questions 28
Available Feb 23 at 7:30am - Feb 23 at 8:30am about 1 hour
Time Limit 60 Minutes
Attempt History
LATEST
Attempt
Time
Score
Attempt 1
50 minutes
37 out of 40
 Correct answers will be available on Feb 28 at 10pm.
Score for this quiz: 37 out of 40
Submitted Feb 23 at 8:29am
This attempt took 50 minutes.
Question 1
1 / 1 pts
Under IFRS 16, a lessee is required to recognize
Right of use asset and lease liability
Right of use asset but not lease liability
Lease liability but not right of use asset
Neither right of use asset nor lease liability
Incorrect
Question 2
0 / 1 pts
The lessee may apply the operating lease model under what condition?
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1/21
2/23/2021
QUIZ - Lease: ACC C206-204A INTERMEDIATE ACCTG 2 & 3 T/F | 7:30AM-10:30AM
Under all circumstances
Short – term lease
Low value lease
Both short – term lease and low value lease
Question 3
1 / 1 pts
Which of the following statements is true about low value lease?
All of these statements are true about low value lease
The value of an underlying asset is based on the value of the asset when
new regardless of the age asset
The term of a low value lease may be more than twelve months
An underlying asset does not qualify as low value lease if the nature of the
asset is such that the asset is typically not of low value when new.
Incorrect
Question 4
0 / 1 pts
The lease payments include all, except
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2/21
2/23/2021
QUIZ - Lease: ACC C206-204A INTERMEDIATE ACCTG 2 & 3 T/F | 7:30AM-10:30AM
The lessee’s obligation to pay executor cost
The residual value guarantee
The purchase option that is reasonably certain to be exercised
Any payment that the lessee must make upon failure to extend or renew
the lease
Incorrect
Question 5
0 / 1 pts
The primary difference between a direct financing lease and a sales type
lease is the
Recognition of the manufacturer or dealer profit at the inception of the
lease
Manner in which rental collections are recorded as rental income
Depreciation recorded each year by the lessor
Allocation of initial direct costs incurred by the lessor over the lease term
Question 6
1 / 1 pts
All the following would be included in the lease receivable except
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2/23/2021
QUIZ - Lease: ACC C206-204A INTERMEDIATE ACCTG 2 & 3 T/F | 7:30AM-10:30AM
All would be included
Bargain purchase option
Guaranteed residual value
Unguaranteed residual value
Question 7
1 / 1 pts
In a direct financing lease, unearned interest income
Should be amortized over the lease term using interest method
Should be amortized over the lease term using straight line method
Does not arise
Should be recognized at the lease inception
Question 8
1 / 1 pts
Under a sales type lease, what is the meaning of gross investment in the
lease?
Aggregate of minimum lease payments and residual value weather
guaranteed or unguaranteed
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2/23/2021
QUIZ - Lease: ACC C206-204A INTERMEDIATE ACCTG 2 & 3 T/F | 7:30AM-10:30AM
Present value of minimum lease payments
Absolute amount of minimum lease payment
Present value of minimum lease payment plus present value of
unguaranteed residual value
Question 9
1 / 1 pts
In a sale and leaseback transaction resulting in an operating lease, which
of the following statement is incorrect?
The buyer – lessor records a gain
The seller – lessee derecognizes the asset
The seller – lessee records rent expense
All of these are correct statements
Question 10
1 / 1 pts
The measurement of lease liability is
At Present value of lease payment
At Fair value of lease payment
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2/23/2021
QUIZ - Lease: ACC C206-204A INTERMEDIATE ACCTG 2 & 3 T/F | 7:30AM-10:30AM
Under all circumstances
At the cost of asset
Question 11
2 / 2 pts
Spring Company leased machinery with useful life of 10 years for 10
years on January 1, 2017. At that date, the fair value of the machinery
was P4,900,000.00
Annual rentals of P700,000.00 are payable in advance on January 1 and
the interest rate implicit in the lease is 9%.
What is the total liability (principal and interest) which should be
recognized on December 31, 2017 and what is the interest expense for
2017?
700,000 & 378,000
4,641,000 & 700,000
4,578,000 & 4,578,000
0&0
Question 12
2 / 2 pts
Lessee Company leased a machinery on January 1, 2017 with the
following information:
Annual rental payable at the end of each
1,000,000
year
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2/23/2021
QUIZ - Lease: ACC C206-204A INTERMEDIATE ACCTG 2 & 3 T/F | 7:30AM-10:30AM
Residual value guarantee
500,000
Payment to lessor to obtain a long-term lease
300,000
Cost of dismantling and restoring the asset
as
required by contract at present value
390,000
Annual executory cost paid by lessee
50,000
Lease term
4 years
Useful life of machinery
8 years
Implicit interest rate
10%
PV of an ordinary annuity of 1 at 10% for 4
periods
3.17
PV of 1 at 10% for 4 periods
0.68
What is the initial lease liability on January 1, 2017 and what is the cost of
right of use asset?
3,510,000 & 4,200,000
3,170,000 & 3,810,000
4,000,000 & 3,900,000
4,010,000 & 4,250,000
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7/21
2/23/2021
QUIZ - Lease: ACC C206-204A INTERMEDIATE ACCTG 2 & 3 T/F | 7:30AM-10:30AM
2 / 2 pts
Question 13
Lessee Company leased a machinery on January 1, 2017 with the
following information:
Annual rental payable at the end of each
year
1,000,000
Residual value guarantee
500,000
Payment to lessor to obtain a long-term lease
300,000
Cost of dismantling and restoring the asset
as
required by contract at present value
390,000
Annual executory cost paid by lessee
50,000
Lease term
4 years
Useful life of machinery
8 years
Implicit interest rate
10%
PV of an ordinary annuity of 1 at 10% for 4
periods
PV of 1 at 10% for 4 periods
3.17
0.68
What is the depreciation expense for 2018 and what is the lease liability
on December 31, 2017?
925,000 & 2,861,000
965,000 & 2,510,000
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8/21
2/23/2021
QUIZ - Lease: ACC C206-204A INTERMEDIATE ACCTG 2 & 3 T/F | 7:30AM-10:30AM
850,000 & 3,620,000
935,000 & 1,361,810
Question 14
1 / 1 pts
Kingstart Company leased an equipment for 6 years from another entity
on January 1, 2017, The entity recorded the right of use asset at
P4,800,000 which included a purchase option of P100,000. On this date,
Yemen Company is certain to exercise the option.
The equipment had an eight-year useful life and a fair value of P300,000
at end of the useful life.
On January 1, 2023, the entity did not exercise the purchase option.
What is the loss on finance lease to be recognized in 2023?
1,325,000
1,425,000
200,000
0
Question 15
2 / 2 pts
On January 1, 2017, Complex Company leased a machine to another
entity for a four-year period. The annual rentals will be paid by the lessee
beginning December 31, 2017. The lease agreement called for a 10%
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2/23/2021
QUIZ - Lease: ACC C206-204A INTERMEDIATE ACCTG 2 & 3 T/F | 7:30AM-10:30AM
increase in annual rental per annum. The rental due on December 31,
2020 was P133,100.
What is the rental payment due on December 31, 2018? What is the
rental income for the year ended December 31, 2017?
110,000 & 116,025
121,000 & 100,000
100,000 & 110,000
90,909 & 105,477
Question 16
2 / 2 pts
Blackbeard Company is a dealer in machinery. On January 1, 2017, a
machinery was leased to another entity with the following provisions:
Annual Rental Payable at the end of each year
3,000,00
Lease term and useful life of machinery
5 years
Cost of Machinery
8,000,00
Residual value - unguaranteed
1,000,00
Implicit interest rate
12%
PV of an ordinary annuity of 1 for 5 periods at
12%
3.60
PV of 1 for 5 periods at 12%
0.57
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10/21
2/23/2021
QUIZ - Lease: ACC C206-204A INTERMEDIATE ACCTG 2 & 3 T/F | 7:30AM-10:30AM
At the end of the lease term on December 31, 2021, the machinery will
revert to Blackbeard Company. Blackbeard incurred initial direct cost of
P300,000 in finalizing the lease agreement.
On January 1, 2017hat is the unearned interest income? What amount
should be reported as gross profit on sales in 2017?
4,630,000 & 3,070,000
3,630,000 & 2,500,000
5,200,000 & 3,370,000
4,200,000 & 7,700,000
Question 17
1 / 1 pts
Blackbeard Company is a dealer in machinery. On January 1, 2017, a
machinery was leased to another entity with the following provisions:
Annual Rental Payable at the end of each year
3,000,00
Lease term and useful life of machinery
5 years
Cost of Machinery
8,000,00
Residual value - unguaranteed
1,000,00
Implicit interest rate
12%
PV of an ordinary annuity of 1 for 5 periods at
12%
3.60
PV of 1 for 5 periods at 12%
0.57
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2/23/2021
o
QUIZ - Lease: ACC C206-204A INTERMEDIATE ACCTG 2 & 3 T/F | 7:30AM-10:30AM
o 5 pe ods at
%
05
At the end of the lease term on December 31, 2021, the machinery will
revert to Blackbeard Company. Blackbeard incurred initial direct cost of
P300,000 in finalizing the lease agreement. What is the interest income
for 2017?
1,364,400
1,800,000
926,000
1,296,000
Question 18
2 / 2 pts
Western Company leased equipment to Rave Company on January 1,
2017. The lease is for an eight-year period expiring December 31, 2024.
The first of eight equal annual payments of P900,000 was made on
January 1, 2017. The entity had purchased the equipment for P4,800,000.
The lease is appropriately accounted for as a sales type lease. The
present value on January 1, 2017 of all rent payments over the lease term
discounted at a 10% interest rate was P 5,280,000.
For 2017, what is the gross profit on sales? What amount of interest
revenue should be recorded in 2017?
480,000; 438,000
1,920,000; 490,000
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12/21
2/23/2021
QUIZ - Lease: ACC C206-204A INTERMEDIATE ACCTG 2 & 3 T/F | 7:30AM-10:30AM
2,400,000; 340,980
240,000; 528,000
Question 19
1 / 1 pts
Western Company leased equipment to Rave Company on January 1,
2017. The lease is for an eight-year period expiring December 31, 2024.
The first of eight equal annual payments of P900,000 was made on
January 1, 2017. The entity had purchased the equipment for P4,800,000.
The lease is appropriately accounted for as a sales type lease. The
present value on January 1, 2017 of all rent payments over the lease term
discounted at a 10% interest rate was P 5,280,000.
What amount of interest revenue should be recorded in 2018?
391,800
438,000
480,000
490,000
Question 20
1 / 1 pts
Kendra Company acquired a specialized packaging machine for
P3,000,000 cash and leased it for a period of six years, after which the
machine is to be returned to Kendra Company. The unguaranteed
residual value of the machine is P200,000 The lease terms are arranged
so that a return of 12% is earned by Kendra. The PV of 1 at 12% for six
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2/23/2021
QUIZ - Lease: ACC C206-204A INTERMEDIATE ACCTG 2 & 3 T/F | 7:30AM-10:30AM
period is ,51, and the PV of an annuity in advance of 1 at 12% for six
period is 4.60. What is the annual lease payment payable in advance
required to yield the desired return?
630,000
732,000
652,174
608,695
Question 21
2 / 2 pts
Kyle Company entered into a finance lease on January 1, 2017. A third
party guaranteed the residual value of the asset under the lease
estimated to be P 1,200,000 on January 1, 2022, the end of the lease
term. Annual lease payments are P 1,000,000 due each December 31,
beginning December 31, 2017. The last payment is due December 31,
2021. The remaining useful life of the asset was six years at the
commencement of the lease. Both the lessor and lessee used 10% as the
interest rate. The PV of 1 at 10% for 5 periods is .62, and the PV of an
ordinary annuity of 1 at 10% for 5 periods is 3.79.
What is the net lease receivable of the lessor at the commencement of
the lease? What is the gross investment in the lease?
4,534.000; 6,200,000
3,790,000; 3,800,000
2,590,000; 5,000,000
4,990,000; 3,800,000
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2/23/2021
QUIZ - Lease: ACC C206-204A INTERMEDIATE ACCTG 2 & 3 T/F | 7:30AM-10:30AM
Question 22
2 / 2 pts
Kyle Company entered into a finance lease on January 1, 2017. A third
party guaranteed the residual value of the asset under the lease
estimated to be P 1,200,000 on January 1, 2022, the end of the lease
term. Annual lease payments are P 1,000,000 due each December 31,
beginning December 31, 2017. The last payment is due December 31,
2021. The remaining useful life of the asset was six years at the
commencement of the lease. Both the lessor and lessee used 10% as the
interest rate. The PV of 1 at 10% for 5 periods is .62, and the PV of an
ordinary annuity of 1 at 10% for 5 periods is 3.79.
What is the total unearned interest income? What is the interest income
for 2017?
1,666,000; 453,400
1,210,000; a. 620,000
2,410,000; 500,000
466,000; 379,000
Question 23
2 / 2 pts
On January 1, 2017, Strange Company sold an equipment with remaining
life of 10 years and immediately leased it back for 4 years at the prevailing
market rental.
Sale Price at fair value
6,000,000
Carrying amount of equipment
4,500,000
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15/21
2/23/2021
QUIZ - Lease: ACC C206-204A INTERMEDIATE ACCTG 2 & 3 T/F | 7:30AM-10:30AM
Annual rental payable at the end of each year
800,000
Implicit interest rate
10%
Present value of an ordinary annuity of
1 at 10% for four periods
3.17
What is the initial lease liability and the cost of right of use asset?
2,536,000; 1,902,000
3,200,000; 2,598,000
3,000,000; 2,536,000
0;0
2 / 2 pts
Question 24
On January 1, 2017, Strange Company sold an equipment with remaining
life of 10 years and immediately leased it back for 4 years at the prevailing
market rental.
Sale Price at fair value
6,000,000
Carrying amount of equipment
4,500,000
Annual rental payable at the end of each year
800,000
Implicit interest rate
10%
Present value of an ordinary annuity of
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16/21
2/23/2021
QUIZ - Lease: ACC C206-204A INTERMEDIATE ACCTG 2 & 3 T/F | 7:30AM-10:30AM
Present value of an ordinary annuity of
1 at 10% for four periods
3.17
What is the gain on right transferred to the buyer – lessor? What is the
gain on right transferred to the buyer – lessor?
866,000; 75,500
634,000; 190,200
750,000; 634,000
0;0
1 / 1 pts
Question 25
On January 1, 2017, Strange Company sold an equipment with remaining
life of 10 years and immediately leased it back for 4 years at the prevailing
market rental.
Sale Price at fair value
6,000,000
Carrying amount of equipment
4,500,000
Annual rental payable at the end of each year
800,000
Implicit interest rate
10%
Present value of an ordinary annuity of
1 at 10% for four periods
3.17
What is the net annual rental income of the buyer – lessor?
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2/23/2021
QUIZ - Lease: ACC C206-204A INTERMEDIATE ACCTG 2 & 3 T/F | 7:30AM-10:30AM
200,000
800,000
600,000
400,000
2 / 2 pts
Question 26
On January 1, 2017, Things Company sold a building with remaining life
of 20 years and immediately leased it back for 5 years.
Sale Price
20,000,000
Fair Value of Building
18,000,000
Carrying amount of Building
10,800,000
Annual rental payable at the end of each year
1,500,000
Implicit interest rate
12%
Present value of an ordinary annuity of
1 at 10% for four periods
3.6
What is the initial lease liability and the cost of right of use asset?
5,400,000 and 2,040,000
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18/21
2/23/2021
QUIZ - Lease: ACC C206-204A INTERMEDIATE ACCTG 2 & 3 T/F | 7:30AM-10:30AM
3,400,000 and 4,000,000
7,500,000 and 2,000,000
7,400,000 and 3,000,000
2 / 2 pts
Question 27
On January 1, 2017, Things Company sold a building with remaining life
of 20 years and immediately leased it back for 5 years.
Sale Price
20,000,000
Fair Value of Building
18,000,000
Carrying amount of Building
10,800,000
Annual rental payable at the end of each year
1,500,000
Implicit interest rate
12%
Present value of an ordinary annuity of
1 at 10% for four periods
3.6
What is the gain in right transferred to the buyer – lessor? What is the
gross rental income of the buyer – lessor?
5,840,000; 944,444
7,200,000; 1,500,000
1,500,000; 2,000,000
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19/21
2/23/2021
QUIZ - Lease: ACC C206-204A INTERMEDIATE ACCTG 2 & 3 T/F | 7:30AM-10:30AM
5,600,000; 555,556
1 / 1 pts
Question 28
On January 1, 2017, Things Company sold a building with remaining life
of 20 years and immediately leased it back for 5 years.
Sale Price
20,000,000
Fair Value of Building
18,000,000
Carrying amount of Building
10,800,000
Annual rental payable at the end of each year
1,500,000
Implicit interest rate
12%
Present value of an ordinary annuity of
1 at 10% for four periods
3.6
What is the depreciation of the building of the buyer – lessor?
900,000
1,000,000
1,500,000
500,000
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20/21
2/23/2021
QUIZ - Lease: ACC C206-204A INTERMEDIATE ACCTG 2 & 3 T/F | 7:30AM-10:30AM
Quiz Score: 37 out of 40
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