Listed below are five terms followed by a list of phrases that describe or characterize each...

Listed below are five terms followed by a list of phrases that describe or characterize each of the terms. Match each phrase with the correct term.

	Lessor's lease receipts
-	Lessee's guarantee
-	Nonlease components
-	Bargain purchase option
- .	Sales-type lease

A.	Marketing tool for lessor.
B.	Maintenance fees.
C.	Additional cash payment included in lease liability calculation.
D.	Residual value.
E.	Rent payments plus guaranteed residual value.

Solutions

Expert Solution

Solution

Matching phrases with correct term:

Non-Lease components Maintenance Fees

Explanation: Lease contracts might include non-lease components alongside lease components. Few instances of non-lease components are maintenance services (fees) or activities that do not transfer goods or services to the lessee.

Lessor’s Lease Receipts Rent payment plus guaranteed residual value.

Explanation: Under capital lease, the lessee may assure the residual value alongside the rent payment to the lessor.

Sales Type Lease Marketing Tool for Lessor

Explanation: When the lessor is a manufacturer or dealer, the fair value of the asset becomes the selling price and the lessor views the lease as marketing tool to sell the asset.

Lessee’s Guarantee Residual value

Explanation: lessee guarantees residual value payment at the end of the lease term.

Bargain purchase option Additional cash payment included in the lease liability calculation.

Explanation – When the lessee opts to buy the leased asset at the end of the term at a price significantly lower than the fair value of the asset.

ekkarill92 answered 8 months ago

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