fAR 5 EX A

Lessee shall record an operating lease as rental expense using the straight line basis even if payemnts are made on some other basis, unless another systematic and rational basis is more representative.

Lessee shall record an operating lease as ---------------------- using the ------------------- even if payemnts are made on some other basis, unless another systematic and rational basis is more representative.

A lessee had a  ten year capital lease requireing equal annual payments.  The reduction of the lease leabilty in year 2 should equal:

a. The current liability shown for the lease at the end of year 1

b. The surrent liability shown for the lease at the end of year 2

c. The reduction of hte lease obligation in year 1

d. One-tenth of the original lease leabiltity

There is ------------ interest component for an operating lease

a 20 year property lease classified as an operting lease provides a 10% increase in annual payments every 5 years.  In the 6th year compared to the 5th year the lease will cause the following expenses to increase

       rent         interest
a       no              yes
b       yes             no
c        yes            yes
d        no              no

unearned interest in a sales type (finance) lease is ------------------------ over the period of the lease using the effective interest method

unearned interest in a sales type (finance) lease is amortized over the period of the lease using the ---------------------------

what is an annuity due

an ------------------------------ is an annuity with payments at the beginning ofthe period

------------------------------should be depreciated in accordance with the lessees normal depreciation policy not to exceed the estimated usefullife if hte lease transfers ownership or contains a bargan purchase option.

capitalized equioment should be depreciated in accordance with the lessees ------------------------------------- not to exceed the estimated usefullife if hte lease transfers ownership or contains a bargan purchase option.

------------------------------should be depreciated in accordance with the lessees normal depreciation policy not to exceed the estimated usefullife if the lease transfers ownership or contains a bargan purchase option.