Quiz Review Week 7

Week 7 Quiz Review – Chapter 15 Here are the topics covered on the quiz. You should know the following: 1. Four factors in determining whether a lease is capital or operating, and computing present value of minimum lease payments. 2. If a lease qualifies as a capital lease, what is the cost basis of the asset acquired 3. If a lease is not Operating, whether it is a Sales-type lease or a Direct financing lease to lessor (and how the latter two differ) 4. Rent expense to be recognized by lessee for an operating lease 5. Amount of lease expense to record on lessee’s books for an operating lease, when payments decrease each year of the lease term 6. Depreciation expense to be recorded by lessee for a capital lease, given expected residual value and economic life of the asset as well as lease term 7. Balance reported by lessee as a liability more than one year after inception of a capital lease 8. Entry to be made by lessor at beginning of lease term, for an operating lease 9. Interest revenue to be recorded on lessor’s books for a salestype lease