1. Which of the following statements is true when comparing the accounting for leasing transactions under U.S. GAAP with IFRS?
2. A lessor with a sales-type lease involving an unguaranteed residual value available to the lessor at the end of the lease term will report sales revenue in the period of inception of the lease at which of the following amounts?
3. Which of the following is an advantage of leasing?
4. Which of the following is a correct statement of one of the capitalization criteria?
5. Hull Co. leased equipment to Riggs Company on May 1, 2013. At that time the collectibility of the minimum lease payments was not reasonably predictable. The lease expires on May 1, 2014. Riggs could have bought the equipment from Hull for $4,000,000 instead of leasing it. Hull's accounting records showed a book value for the equipment on May 1, 2010, of $3,500,000. Hull's depreciation on the equipment in 2013 was $450,000. During 2013, Riggs paid $900,000 in rentals to Hull for the 8-month period. Hull incurred maintenance and other related costs under the terms of the lease of $80,000 in 2013. After the lease with Riggs expires, Hull will lease the equipment to another company for two years.