1. The primary difference between a direct financing lease and a sales type is the
   1. Manner in which rental receipts are recorded as rental income
   2. Amount of the depreciation recorded each year by the lessor
   3. Recognition of the manufacturer or dealer profit at the inception of the lease
   4. Allocation of initial direct costs by the lessor to periods benefited by the lease arrangement
2. A lessor with a sales type lease involving an unguaranteed residual value available to the lessor at the end of the lease term would report sales revenue at which of the following amounts?
   1. The minimum lease payments plus the unguaranteed residual value
   2. The present value of the minimum lease payments
   3. The cost of the asset to the lessor less the present value of any unguaranteed residual value
   4. The present value of the minimum lease payments plus the present value of the unguaranteed residual value
3. The interest rate implicit in the lease is the discount rate that causes the aggregate of the present value of the minimum lease payments and the unguaranteed residual value to equal the
   1. Fair value of the leased asset
   2. Fair value of the leased asset and initial direct costs of the lessor
   3. Fair value of the leased asset and initial direct costs of the lessee
   4. Gross investment in the lease
4. Statement I : Income Tax Expense is based on Accounting Income

Statement II : Income Tax Payable is based on Provisions of NIRC

4. 1. Both Statements are True
   2. Both Statements are False
   3. Only Statement 1 is True
   4. Only Statement 2 is True
5. Statement I : Future Taxable Difference is a Permanent Difference

Statement II : Future Deductible Difference is a Temporary Difference

5. 1. Both Statements are True
   2. Both Statements are False
   3. Only Statement 1 is True
   4. Only Statement 2 is True
6. Statement I : In a Direct Financing Lease the Lessor earn from Financing Income Only

Statement II : In a Direct Financing Lease the Lessor does not earn Dealers Income

1. Both Statements are True
2. Both Statements are False
3. Only Statement 1 is True
4. Only Statement 2 is True