**PLEASE CHOOSE CORRECT ANSWER AND EXPLAIN REASON*** RED MEANS THE CHOICE IS WRONG

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Return to question Consistent with ASC Topic 842, if a company sells an asset for a profit of $175,000 and immediately leases it back, the gain is recognized Multiple Choice over the life of the lease in proportion to the rental payment. X over the life of the lease using the same rate and life used to amortize the leased asset. O immediately as an ordinary gain, assuming that criteria are met consist with ASC Topic 606. O Immediately as a gain to include in discontinued operations. Return to question Ford signs a non-cancelable 8-year equipment lease with Ray. The lease has an implicit rate of return of 10% to Ray, the lessor. This rate is known to Ford. Ray's incremental borrowing rate is 8.5%. Ford has a 9% incremental borrowing rate. Ray believes that the equipment has a 10-year service life but has reason to suspect that a major overhaul might be required in the fifth to seventh year. Since this is the first year of the equipment's production, Ray warrants equipment for eight full years anyway. On Ray's books, this lease is treated as a(n): Multiple Choice O sales-type capital lease. O operating lease short-term lease. finance capital lease, Return to question Over the lease term, the total income derived from a lease is if the lease is classified as a sales-type lease instead of an operating lease. Multiple Choice the same lower higher O depends on the interest rate applied to the lease Return to Consistent with ASC Topic 842 and IFRS 16, leases should be accounted for under the assumption Multiple Choice executory rights unilateral property rights O temporary