Reference no: EM132815381

Problem 1: For the lessor to recognize a lease as a sales-type lease, under ASC 842, the following must occur.

Option 1: At least one of the finance lease criteria is met, at least one of the certainty criteria is met, and there is a manufacturer or dealer's profit.

Option 2: At least one of the finance lease criteria is met.

Option 3: More than one of the finance lease criteria are met, both certainty criteria are met, and there is a manufacturer or dealer's profit.

Option 4: Only one of the finance lease criteria is met, both certainty criteria are met, and there is a manufacturer or dealer's profit.

Problem 2: What is the primary accounting issue for lessors?

Option 1: Off-balance sheet financing.

Option 2: Revenue recognition and expense allocation over the lease term.

Option 3: Treating the lease in the same manner as the lessee does.

Option 4: Determining whether the lease is a sales-type lease or a direct financing lease.