Accounting Unit 8
· After reading the information on accounting for leases in Chapter 15 from your Intermediate Accounting text, use a Word or an Excel document to complete the following exercise and address the following problems:
o E 15-35, “Concepts; Terminology,” page 883.
§ This exercise focuses on lease concepts and terminology.
E 15–35
Concepts; terminology
• LO15–2 through LO15–8
Prepare the appropriate entries for the lessor from the beginning of the lease through the end of the lease term.
Listed below are several terms and phrases associated with leases. Pair each item from
List A
with the item from
List B
(by letter) that is most appropriately associated with it.
List A
List B
- 1. Effective rate times balance
- 2. Revenue recognition issues
- 3. Lease payments plus residual value
- 4. Periodic lease payments plus excess lessee-guaranteed residual value
- 5. PV of lease payments plus PV of residual value
- 6. Initial direct costs
- 7. Rent revenue
- 8. Purchase option
- 9. Leasehold improvements
- 10. Cash expected to satisfy residual value guarantee
- 11. Finance lease expense
- 12. Deducted in lessor’s computation of lease payments
- 13. Title transfers to lessee
- 14. Contingent rentals
- PV of purchase option exercise price
- Lessor’s net investment
- Lessor’s gross investment
- Operating lease
- Depreciable assets
- Component of lease payments
- Nonlease payments
- Depreciation longer than lease term
- Disclosure only
- Interest expense
- Control passed to lessee
- Lessee’s lease payments
- Might shorten lease term
- Sales-type lease selling expense
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Using Internet resources or the Capella University Library, research and write an essay on the importance and challenges of minimizing working capital. Your paper should be 4–6 pages in length and include three outside references. Your writing should be well organized and clear. Writing structure, spelling, and grammar should be correct as well.