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    Operating Lease Problems 1

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    The document discusses four multiple choice questions about accounting for operating leases as a lessor. The questions cover topics such as allocation of initial direct costs, recognition of lease bonuses and rent income, and reporting of unearned rent and security deposits.

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    Operating Lease Problems 1

    Uploaded by

    ncq6dmzmp4
    218 views1 page
    The document discusses four multiple choice questions about accounting for operating leases as a lessor. The questions cover topics such as allocation of initial direct costs, recognition of lease bonuses and rent income, and reporting of unearned rent and security deposits.

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    The document discusses four multiple choice questions about accounting for operating leases as a lessor. The questions cover topics such as allocation of initial direct costs, recognition of lease bonuses and rent income, and reporting of unearned rent and security deposits.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    218 views1 page

    Operating Lease Problems 1

    Uploaded by

    ncq6dmzmp4
    The document discusses four multiple choice questions about accounting for operating leases as a lessor. The questions cover topics such as allocation of initial direct costs, recognition of lease bonuses and rent income, and reporting of unearned rent and security deposits.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 1

    NATIONAL UNIVERSITY

    Manila
    INTERMEDIATE ACCOUNTING 2 ACT22A/ACT22B

    OPERATING LEASE - LESSOR


    1. On January 1, 2024, an entity owned a building held as investment property using the cost model. The
    carrying amount of the building was P9,000,000 with remaining useful life of 10 years. On April 1,
    2024, the entity leased the building to a lessee for three years at monthly rental of P200,000. The lessee
    paid the rental for one year of P2,400,000 and P2,000,000 security deposit to be refunded upon
    expiration of the lease. On April 1, 2024, the lessee additionally paid P1,200,000 as a lease bonus. On
    April 1, 2024, the entity paid P600,000 to a broker as a finder fee. During 2024, the entity paid
    property tax of P200,000 and P50,000 insurance on the building?
    I. The initial direct cost incurred by lessor in an operating lease is allocated as expense over the
    lease term.
    II. The lease bonus in an operating lease is recognized as rent income by the lessor over the lease
    term
    III. The net rental income of the lessor is P800,000 for 2024.
    a. All statements are true
    b. All statements are false
    c. Only statements I and II are true
    d. Only statements II and III are true

    2. On July 1, 2024, an entity leased an equipment to a lessee under a 3-year operating lease. Total rent for
    the lease term is P7,200,000, payable P100,000 monthly for the first lease year, P150,000 monthly for
    the second lease year and P350,000 monthly for the third lease year. The fiscal ends June 30.
    I. The total unequal rentals for the entire lease term should be amortized as rental income
    uniformly on a straight line basis over the lease term.
    II. The rental income for the year ended June 30, 2025 should be reported at P1,200,000.
    III. The accrued rent receivable on June 30, 2026 should be reported at P1,800,000.
    a. All statements are true
    b. All statements are false
    c. Only statements I and II are true
    d. Only statements I and III are true

    3. As an inducement to enter a lease, a lessor granted a lessee nine months of free rent under a five year
    operating lease.
    The lease is effective on April 1, 2024 and provided for monthly rental of P100,000 to begin January
    1, 2025.
    I. The rent income should be reported at P765,000 for 2024.
    II. The accrued rent receivable should be reported at P585,000 on December 31, 2025.
    a. Statements I and II are true
    b. Statements I and II are false
    c. Only statement I is true
    d. Only statement II is true

    4. On January 1, 2024, a lessor leased a building to lessee for a ten-year term at an annual rental of
    P500,000. At inception of the lease the lessee, received P2,000,000 covering the first two years’ rent of
    P1,000,000 and a security deposit of P1,000,000. The deposit will not be returned to the lessee upon
    expiration of the lease but will be applied to payment of rent for the last two years of the lease.
    I. The second year’s rent P500,000 is unearned rent income and reported as current liability on
    December 31, 2024.
    II. The security deposit of P1,000,000 is unearned rent deposit and reported as noncurrent liability on
    December 31, 2024.
    a. Statements I and II are true
    b. Statements I and II are false
    c. Only statement I is true
    d. Only statement II is true

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