Question 1 0 out of 1 points The appropriate valuation of an operating lease on the statement of financial position of a lessee is Answer Selected

Answer: The absolute sum of the lease payments Correct Answer: Zero Question 2 0 out of 1 points Based solely upon the following sets of circumstances, indicate below which set gives rise to a sales type or direct financing lease of a lessor:

Transfers Ownership by End Contains Bargain of Lease Purchase Provision A B C D No Yes Yes No Yes No Yes No

Answer Selected Answer: B Correct Answer:

C Question 3 0 out of 1 points When measuring the present value of future rentals to be capitalized as part of the purchase price in a lease that is be accounted for as a purchase, identifiable payments to cover taxes, insurance, and maintenance should be Answer Selected Answer: Included in the future rentals to be capitalized Correct Answer: Excluded from future rentals to be capitalized Question 4 0 out of 1 points Office equipment recorded under a capital lease containing a bargain purchase option should be amortized Answer Selected Answer:

In a manner consistent with the lessees normal depreciation policy for owned assets except that the period of amortization should be the lease term

Correct Answer:

In a manner consistent with the lessees normal depreciation policy for owned assets

Question 5 0 out of 1 points

Equal monthly rental payments for a particular lease should be charged to rental expense by the lessee for which of the following?

Capital lease A B C D Answer Selected Answer: B Correct Answer: D Question 6 1 out of 1 points Yes Yes No No

Operating lease No Yes No Yes

What is the primary accounting issue for lessors? Answer Selected Answer: Revenue recognition and expense allocation over the lease term. Correct Answer: Revenue recognition and expense allocation over the lease term. Question 7 0 out of 1 points

A net operating loss carryover that occurs in a companys second year of operations Answer Selected Answer:

Results in future taxable amounts.

Correct Answer:

May cause a company to report a tax benefit in the current period income statement.

Question 8 0 out of 1 points For a sales-type lease, the net investment is equal to Answer Selected Answer:

The present value of the minimum lease payments plus executor costs.

Correct Answer: The present value of the gross investment. Question 9 1 out of 1 points When does the lessee report executory costs as an expense? Answer Selected Answer: When they are incurred by the lessee. Correct Answer:

When they are incurred by the lessee. Question 10 0 out of 1 points When a lease contract does not transfer title to the lessee, there is no bargain purchase option, and the lease term is not at least 75 percent of the estimated useful life of the leased asset. Answer Selected Answer:

The interest rate used to determine the present value of the minimum lease payments also determines whether the lease is a capital lease or an operating lease.

Correct Answer:

The amount of unguaranteed salvage value, if any, determines whether the lease is a capital lease or an operating lease.

Question 11 0 out of 1 points A six-year-capital lease entered into on December 31, 2008, specified equal minimum annual lease payments due on December 31, 2010. Minimum payment applicable to which of the following increased over the corresponding December 31, 2010, minimum payment?

Interest Expense A B C D Yes Yes No No

Reduction of Liability Yes No Yes No

Answer Selected Answer: A Correct Answer: C Question 12 0 out of 1 points Generally accepted accounting principles require that certain lease agreements be accounted for as purchases. The theoretical basis for this treatment is that a lease of this type Answer Selected Answer:

Provides the use of the leased asset to the lessee for a limited period of time

Correct Answer:

Effectively conveys all of the benefits and risks incident to the ownership of property

Question 13 0 out of 1 points What is the primary accounting issue for lessees? Answer Selected Answer: Recording interest expense on the lease obligation.

Correct Answer: Off-balance sheet financing. Question 14 0 out of 1 points In a lease that is recorded as a sales-type lease by the lessor, the difference between the gross investment in the lease and sum of the present values of the components of the gross investment should be recognized as income Answer Selected Answer:

Over the period of the lease using the interest method of amortization

Correct Answer: In full at the leases inception Question 15 0 out of 1 points If the lessor incurs initial direct cost to bring about the lease, when are those costs expensed in total during the first year of the lease term. Answer Selected Answer:

Initial direct costs are always expensed during the first year of the lease term.

Correct Answer:

When the lease is classified as a direct financing lease.

Question 16 1 out of 1 points

If the projected benefit obligation of a defined benefit pension plan exceeds the fair value of the pension plan assets, the employer must report Answer Selected Answer:

The difference as a liability in the balance sheet and a corresponding adjustment to other comprehensive income, net of deferred income taxes .

Correct Answer:

The difference as a liability in the balance sheet and a corresponding adjustment to other comprehensive income, net of deferred income taxes .

Question 17 1 out of 1 points In accounting for a pension plan, any difference between the pension cost charged to expense and the payments into the fund should be reported as Answer Selected Answer: Accrued or prepaid pension cost Correct Answer: Accrued or prepaid pension cost Question 18 1 out of 1 points Some theorists argue that the best measure of the employers defined benefit pension plan obligation is the accumulated benefit obligation. Answer

Selected Answer:

Since the accumulated benefit obligation is measured using current salaries, it represents the conservative floor for a companys pension obligation to its employees.

Correct Answer:

Since the accumulated benefit obligation is measured using current salaries, it represents the conservative floor for a companys pension obligation to its employees.

Question 19 0 out of 1 points According to SFAS No. 87, Employers Accounting for Pensions, gains and losses should be Answer Selected Answer:

Disclosed in a note to the financial statements only

Correct Answer:

Allocated if any unrecognized gain or loss at the beginning of the year is in excess of 10 percent of the greater of the projected benefit obligation or the market value of the plan assets

Question 20 1 out of 1 points The funded status of a defined benefit pension plan is reported in the balance sheet. Answer Selected Answer: As a liability, if the pension plan is underfunded.

Correct Answer: As a liability, if the pension plan is underfunded. Question 21 0 out of 1 points The corridor approach Answer Selected Answer:

Is used to determine how much interest to add to the service cost and amortization of prior service in order to calculate pension expense for the period.

Correct Answer:

Is used to determine the minimum amount of accumulated unamortized net gains or losses that must be amortized during the accounting period.

Question 22 1 out of 1 points benefits that are not contingent on the employee continuing in the service of the company are Answer Selected Answer: Vested benefits. Correct Answer: Vested benefits. Question 23 0 out of 1 points

Benefits under a pension plan that are not contingent upon an employees continuing service are Answer Selected Answer: Granted under a plan of defined contribution Correct Answer: Vested Question 24 0 out of 1 points In determining whether to accrue employees compensation for future absences, among the conditions that must be met are that the obligation relates to rights that

Accumulate Vest A B C D Answer Selected Answer: C Correct Answer: A Question 25 0 out of 1 points No No Yes Yes No Yes No Yes

According to SFAS No. 87, which of the following is never recorded as a component of annual pension cost? Answer Selected Answer:

Amortization of prior service cost

Correct Answer:

Amortization of the intangible asset recorded as the offset to the minimum pension liability

Question 26 0 out of 1 points Which of the following is not a difference between defined benefit pension plans and other postretirement benefits (ORBS) Answer Selected Answer:

Unlike defined benefit pension plan payments, there is no cap on the amount of OORB benefit to be paid to participants .

Correct Answer:

Unlike defined benefit pension plans, management promises OORB payments in exchange for current services.

Question 27 0 out of 1 points What effect did the requirement to replace the minimum liability requirement with the funded status of a pension plan have for overfunded pension plans?. Answer

Selected Answer: The debt-to-Equity ratios increased. Correct Answer: Return on assets decreased. Question 28 0 out of 1 points What effect did the requirement to replace the minimum liability requirement with the funded status of a pension plan have for underfunded pension plans? Answer Selected Answer: There was no effect on return on assets. Correct Answer: The debt-to-Equity ratios increased. Question 29 1 out of 1 points The funded status of a defined benefit pension plan is equal to the Answer Selected Answer:

Projected benefit obligation minus the fair value of the pension plan assets.

Correct Answer: Projected benefit obligation minus the fair value of the pension plan assets. Question 30

0 out of 1 points APB Opinion No. 8 set minimum and maximum limits on the annual provision for pension cost. An amount that was always included in the calculation of both the minimum and the maximum limit is Answer Selected Answer: Amortization of past service cost Correct Answer: Normal cost