Reference no: EM132793048

Problem 1: Carey sold its headquarters building at a gain, and simultaneously leased back the building. The lease was reported as a capital lease. At the time of the sale, the gain should be reported as

A. A deferred gain.

B. An extraordinary item, net of income tax.

C. A separate component of stockholders' equity

D. Operating income

Problem 2: Which of the following best describes current practice in accounting for leases?

A. All leases are capitalized.
B. Leases are not capitalized.
C. All long-term leases are capitalized.
D. Leases similar to installment purchases are capitalized.

Problem 3: In computing amortization of a leased asset where there is no bargain purchase option,

A. an unguaranteed residual value and depreciate over the term of the lease.
B. a guaranteed residual value and depreciate over the life of the asset.
C. an unguaranteed residual value and depreciate over the life of the asset.
D. no residual value and depreciate over the term of the lease.