In the government-wide initial recognition of a leased asset, the asset equals the sum of the present value of lease payments and the down payment.

Unlock all questions

This demo includes only 20 questions. Upgrade to access hundreds of questions, flashcards, exam simulations, and disable ads.

Full question bankExam simulationsFlashcards
From $24.99Unlock all

Enhance your knowledge of GASB and FASAB Standards. Study with multiple choice questions, hints, and detailed explanations. Prepare efficiently for your exam!

Multiple Choice

In the government-wide initial recognition of a leased asset, the asset equals the sum of the present value of lease payments and the down payment.

Explanation:
In government-wide accounting for leases, you record a right-to-use asset and a corresponding lease liability, and the asset is measured at the present value of the lease payments to be made over the lease term. A down payment paid at or before the commencement date is a cash outflow and does not add to the value of the right-to-use asset. It may affect cash or be treated separately as a prepayment, but it does not increase the asset amount recognized for the lease. Therefore, the initial recognition of the leased asset reflects only the present value of the lease payments, not the down payment.

In government-wide accounting for leases, you record a right-to-use asset and a corresponding lease liability, and the asset is measured at the present value of the lease payments to be made over the lease term. A down payment paid at or before the commencement date is a cash outflow and does not add to the value of the right-to-use asset. It may affect cash or be treated separately as a prepayment, but it does not increase the asset amount recognized for the lease. Therefore, the initial recognition of the leased asset reflects only the present value of the lease payments, not the down payment.

More Multiple Choice Questions
Subscribe

Get the latest from Examzify

You can unsubscribe at any time. Read our privacy policy