Intermediate Accounting Volume 2 7Th Edition Beechy Test Bank Full Chapter PDF

Intermediate Accounting Volume 2 7th
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Exam
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MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
1) On January 1st, 2014, ABC Inc. (the lessor) agrees to lease a piece of specialized piece of 1)
machinery to DEF Inc. (the lessee) for 5 years. ABC Inc. is a financial intermediary
specializing in leasing arrangements such as the one described below. Details are as
follows:
Fair value of machinery at inception of the lease: $100,000.

Lease term: 5 years (no bargain renewal terms).
Executory costs of $10,000 are reimbursed by the lessee.
5 Annual lease payments of $23,000 each are made on January 1st of each year starting
on January 1st, 2014.
Bargain purchase option at end of lease: $5,000. It is estimated that the equipment will
have a fair value of $10,000 at the end of the lease.
Economic life of the asset is 10 years, after which the equipment will be worthless.
Straight-line depreciation applies.
ABC's implicit interest rate with respect to this lease is 10%. This is rate is known by DEF
Inc.
DEF Inc's incremental borrowing rate is 9%.
What would be the amount of finance revenue recorded by ABC Inc. in the first year of
the lease (rounded)?
A) $7,601 B) $9,901 C) $10,000 D) $7,700
Answer: A
Explanation: A)
B)
C)
D)
1
follows:

Inc.
Assuming that this qualifies as a finance lease, what would be the amount of DEF Inc's
annual depreciation as per ASPE (rounded)?
A) $9,901 B) $5,000 C) $10,000 D) $10,076
Answer: D
Explanation: A)
B)
C)
D)
2
3) On January 1, 2014, CDE Company leased an asset from LMN which originally cost the 3)
lessor $75,000. The lease agreement was an operating lease and specified that three
$10,500 annual rentals were to be paid at the beginning of each year. LMN should make
the following entry on January 1, 2014:
A) Please see the following table:
Cash 10,500
Lease receivable 10,500
B) Please see the following table:
Rent receivable 10,500

Rent revenue 10,500
C) Please see the following table:
Cash 10,500
Unearned rent revenue 10,500
D) Please see the following table:
Cash 10,500
Rent revenue 10,500
Answer: C
Explanation: A)
B)
C)
D)
3
4) On December 31, 2015, JKL leased a new machine from MNO. The following 4)
information relates to the lease transaction:
* Market value of the machine at inception of lease: $500,000

* the machine has an estimated useful life of seven years, which coincides with the lease
term.
* lease rentals consist of seven equal annual payments of $100,000, the first of which was
paid on December 31, 2015.
* MNO's implicit interest rate is 12 percent, which is known by JKL.
* JKL's incremental borrowing rate is 14 percent at December 31, 2015.
* present value of an annuity of $1 in advance for seven periods at 12 percent is 5.11.
At the inception of the lease, JKL should record a capitalized lease liability of:
A) $489,000 B) $500,000 C) $411,000 D) $511,000
Answer: B
Explanation: A)
B)
C)
D)
5) JMR Company leases an asset from KAR Company. The rate implicit in the lease is 12% 5)
and JMR's incremental borrowing rate is 11%. JMR is aware of the implicit rate.
Assuming that both rates would provide an MLP amount well below the fair value of the
leased asset, the rate that JMR should use for discounting the net lease payment is:
A) 11% under ASPE and 12% under IFRS.
B) 12% under ASPE and 11% under IFRS.
C) 12% under both ASPE and IFRS.
D) 11% under both ASPE and IFRS.
Answer: A
Explanation: A)
B)
C)
D)
4
6) Lease Y contains a bargain purchase option and the lease term is equal to 75 percent of the 6)
estimated economic life of the leased property. Lease Z contains a bargain purchase option
and the lease term is less than 75 percent of the estimated economic life of the leased
property. How would the lessee classify these leases?
Lease Y Lease Z
1 Finance lease Finance lease
2 Finance lease Operating lease
3 Operating lease Operating lease
4 Operating lease Finance lease
A) Choice 1 B) Choice 2 C) Choice 3 D) Choice 4

Answer: A
Explanation: A)
B)
C)
D)
7) RST entered into a direct financing lease with ZAB, which called for seven annual 7)
rentals of $3,500 (interest rate 12 percent) to be paid at the end of each year. The lease
also contained a bargain purchase option allowing ZAB to purchase the asset for $2,500
after making the seventh annual rental payment. The cost of the asset must have been:
A) $25,631 B) $17,105 C) $27,000 D) $18,473
Answer: B
Explanation: A)
B)
C)
D)
8) Choose the correct statement regarding including the terms listed in the lessee's (1) 8)
minimum lease payments and (2) lease liability for a capitalized lease:
(1) (2)
1 Unguaranteed residual No Yes
2 Lessee guarantee of residual Yes Yes
3 Third party guarantee of residual No Yes
4 Bargain purchase option Yes No

Answer: B
Explanation: A)
B)
C)
D)
5
9) On December 10, 2014, LMN purchased a special machine for leasing purposes; it cost 9)
$10,000. On January 1, 2015, the machine was leased to ABC INC. under the following
terms (it is a direct financing lease): a. lease term 4 years; interest rate 10 percent; rentals
payable at year-end. b. LMN retains the residual value of $1,000 (i.e., the RV when the
machine is returned to LMN at the end of year 4). There is no guarantee on the residual
value.
On January 1, 2015, when the lease term starts, the following accounting amounts should
be used:
LMN's net Lease ABC's Lease

Lease payment Receivable Liability
1 $2,939 $9,317 $9,317
2 2,939 10,000 9,317
3 3,155 9,317 10,000
4 3,155 10,000 10,000

Answer: B
Explanation: A)
B)
C)
D)
10) On January 1, 2014, MU Corporation leased an asset, under an operating lease, to obtain 10)
the use of a special machine for three years. The lease payments were $9,000 per year
payable at each year-end; the lessee must pay all operating expenses. At the inception
date, MU Corporation should:
A) record the asset at the present value of the annual lease payments.
B) record the rent expense of $27,000.
C) make no entry.
D) record the asset at $27,000.
E) record the asset at its fair market value.
Answer: C
Explanation: A)
B)
C)
D)
E)
6
11) A lessee wants to lease an asset on a long-term non-cancellable basis, but wants to avoid 11)
capitalizing the lease. The lessee is considering several strategies:
1) use a lessee guarantee of residual value;

2) make it impossible for the lessee, who has a very low borrowing rate, to determine the
lessor's implicit rate, which is much higher than the lessee's borrowing rate;
3) include a bargain purchase option in the lease agreement;
4) include title transfer in the lease agreement.
Which of the above strategies will provide the desired result?

A) 1 and 3 B) only 2 C) 2 and 3 D) none E) 1 and 4
Answer: D
Explanation: A)
B)
C)
D)
E)
12) Amanda Company leased an office building for six years for an annual rent of $170,000. 12)
The lessor agreed to forgive the first year of the lease (i.e. payments would not begin
until the second year). The entry in the second year would include a debit to:
A) deferred liability-$28,333 B) deferred liability-$141,667
C) rent expense-some other amount D) rent expense-$170,000
Answer: A
Explanation: A)
B)
C)
D)
13) The amount of finance revenue to be recognized by JKL Inc. during Year 2 would be: 13)
A) $2,104,672 B) $1,965,419 C) $1,637,124 D) $,2,537,864
Answer: A
Explanation: A)
B)
C)
D)
7
14) Choose the correct statement regarding the terms listed in the lessor's (1) minimum lease 14)
payments and (2) net lease receivable for a capitalized lease:
Include in:
(1) (2)
1 Unguaranteed residual Yes Yes
2 Lessee guarantee of residual No Yes
3 Third party guarantee of residual No Yes
4 Bargain purchase option No No

Answer: A
Explanation: A)
B)
C)
D)
15) A bargain purchase option in a finance lease affects the: 15)

A) lessee's capitalized cost of the leased asset.
B) incremental target rate of return.
C) guaranteed residual value.
D) dealer's profit in a sales-type lease.
Answer: A
Explanation: A)
B)
C)
D)
16) The straight-line method is frequently used to amortize non-refundable rental payments 16)
made in advance on leased assets because:
A) It is less complex, therefore, less costly.
B) IFRS requires that it be used in all situations.
C) It is more theoretically sound.
D) The interest method may result in unreliable amounts being recognized as expense.
Answer: A
Explanation: A)
B)
C)
D)
8
17) If the lessor and lessee use different interest rates to account for a finance lease, then: 17)
A) total expenses (or revenues) will be equal for each.
B) total expenses (or revenues) will be different for each.
C) the lessee and lessor cannot use different interest rates.
D) the lessor will use different account titles to record the leasing transaction.
Answer: B
Explanation: A)
B)
C)
D)
18) For a finance lease, an amount equal to the present value at the beginning of the lease 18)
term of minimum lease payments during the lease term, excluding that portion of the
payments representing executory costs such as insurance, maintenance, and property
taxes to be paid by the lessor, together with any profit thereon, should be recorded by the
lessee as a(n):
A) asset but not a liability. B) expense.
C) liability but not an asset. D) asset and a liability.
Answer: D
Explanation: A)
B)
C)
D)
19) In a sale and leaseback situation: 19)

A) the lessor recognizes all losses on the sale immediately but must defer and amortize
all gains.
B) if the present value of the lease payments is equal to or less than 90% of the fair
value of the property, the lessee recognizes the entire gain or loss on sale
immediately.
C) all gains and losses are deferred and amortized by the seller.
D) the lessee immediately recognizes any loss on sale up to the amount of the
difference between carrying value and fair value.
Answer: D
Explanation: A)
B)
C)
D)
9
20) Equal monthly rental payments for a particular lease should be charged to rental expense 20)
by the lessee for which of the following?
Finance lease Operating lease

1 No No
2 No Yes
3 Yes No
4 Yes Yes

Answer: B
Explanation: A)
B)
C)
D)
21) XYZ Rental leased a special crane to ABC INC. that originally cost $40,000. The lease 21)
was for six years and the rentals were $10,000 per year, payable at each year-end. The
implicit interest rate was 10 percent. XYZ Rental recognized a gross margin (dealer's
profit) of (rounded to nearest dollar):
A) $4,000 B) $24,000 C) $3,553 D) $20,000
Answer: C
Explanation: A)
B)
C)
D)
22) If a lessee does not exercise a bargain purchase option prior to its lapse date, the: 22)
A) bargain purchase option cannot lapse because this option was included in
computing the annual rental amounts.
B) lessee continues to record depreciation on the lease asset because it was assumed
from the beginning that the lessee would retain ownership of the asset.
C) lessee recognizes a gain due to the lapse.
D) lessee recognizes a loss due to the lapse.
Answer: D
Explanation: A)
B)
C)
D)
10
23) On the first day of its fiscal year, Lessor, Inc., leased certain property at an annual rental of 23)
$100,000 receivable at the beginning of each year for ten years. The first payment was
received immediately. The leased property, which is new, had cost $650,000 and has an
estimated useful life of thirteen years and no salvage value.
Lessor's borrowing rate is 8 percent. The present value of an annuity of $1 payable at the
beginning of the period at 8 percent for ten years is 7.247. Lessor had no other costs
associated with this lease. Lessor should have accounted for this lease as a sales-type
lease, but it mistakenly treated the lease as an operating lease. What was the effect on net
earnings during the first year of the lease by having treated this lease as an operating
lease rather than as a sales-type lease?
A) Understated
B) The effect depends on the method selected for income tax purposes
C) No effect
D) Overstated
Answer: A
Explanation: A)
B)
C)
D)
24) CDE leases land and secures the landowner's permission to erect a warehouse on the 24)
leased site. The lease has 25 years to run from the time CDE completes the warehouse at
a cost of $300,000. The warehouse is expected to last 50 years. In connection with the
warehouse, CDE's annual depreciation should be:
A) $7,500
B) $6,000
C) $12,000
D) The entire $300,000 should be expensed the first year.
Answer: C
Explanation: A)
B)
C)
D)
25) One incentive for entering into sale-and-leaseback arrangements is: 25)
A) lessee may be able to reduce finance expense through the refinancing aspects of the
sale-leaseback.
B) tax implications are favourable for the lessor.
C) lessee wants to increase return on investment.
D) lessor has an abundance of cash.
E) improvement in cash flow for the lessor.
Answer: A
Explanation: A)
B)
C)
D)
E)
11
26) JMR Company leases an asset from KAR Company. The rate implicit in the lease is 12% 26)
and JMR's incremental borrowing rate is 11%. JMR is aware of the implicit rate.
Assuming that both rates would provide an MLP amount well below the fair value of the
leased asset, the rate that KAR should use for discounting the net lease payment is:
A) 11% under both ASPE and IFRS.
B) 12% under both ASPE and IFRS.
C) 12% under ASPE and 11% under IFRS.
D) 11% under ASPE and 12% under IFRS.
Answer: D
Explanation: A)
B)
C)
D)
12
27) On January 1, 2014, ABC INC. leased a machine to MNO. The lease was for a 10-year 27)
period, which approximated the useful life of the machine. ABC INC. purchased the
machine for $120,000 and expects to earn a 10 percent return on its investment, based
upon an annual rental of $17,754 payable in advance each January 1st. Assuming that the
lease was a direct financing lease, what should be the interest entry on ABC INC.'s books
on December 31, 2014?
Unearned interest revenue 10,225

Interest revenue 10,225
Cash 5,754
Unearned interest revenue 12,000

Cash 17,754
Equipment 5,754
Answer: A
Explanation: A)
B)
C)
D)
28) Assume now that JKL Inc. adheres to ASPE. The interest rate used by the company to 28)
impute its interest revenue would now be:
A) 8.3698% B) 10.4248% C) 12% D) 7.9308%
Answer: B
Explanation: A)
B)
C)
D)
13
29) Initial direct costs include lessor costs incurred: 29)
A) after obtaining the commitment of a potential lessee to enter into a lease contract
B) before and after obtaining the commitment of a potential lessee to enter into a lease
contract
C) before obtaining the commitment of a potential lessee to enter into a lease contract
D) for the purpose of upgrading an existing lease contract
Answer: A
Explanation: A)
B)
C)
D)
30) Assume the following facts relating to a lease: 30)
Leased asset, new at inception of lease term.

Estimated useful life, 14 years.
Lease term, 8 years; asset returns to lessor.
Interest rate implicit in the lease, 10 percent (known by lessee).
Lessee's marginal borrowing rate, 12 percent.
Amount of each lease payment, $2,000.
Lessor's cost of the leased asset, $15,164.
Market value of leased asset at inception of the lease term, $15,164
Lease payments are due at the end of each period.
From the perspective of the lessee, this lease should be classified as a(n):
A) operating lease. B) finance lease.
C) sales-type lease. D) direct financing lease.
Answer: A
Explanation: A)
B)
C)
D)
14
follows:

Inc.
Assuming that this qualifies as a finance lease, at what amount would DEF Inc. capitalize
the leased machinery at the inception of the lease as per ASPE (rounded)?
A) $100,764 B) $95,907 C) $99,011 D) $100,000
Answer: A
Explanation: A)
B)
C)
D)
32) LAS owns a building in North Bay. LAS enters into an agreement with BH as follows: 32)
LAS sells the building to BH on 1/1/2014 for $2,900,000 (which was the building's fair
value on that date) and immediately leases it back for $500,000 per year for 10 years.
The historical cost of the building was $9,000,000 and accumulated amortization
amounted to $7,000,000. The net effect of this transaction on the statement of
comprehensive income in the year of sale would be:
A) a reduction to net income of $400,000.
B) a reduction to net income of $500,000.
C) a reduction to net income of $590,000.
D) a reduction to net income of $410,000.
Answer: D
Explanation: A)
B)
C)
D)
15
33) A lessor and lessee enter into a lease agreement with the following characteristics: 33)
Inception: 1/1/x0
6 annual lease payments of $10,000 are due each Jan. 1 beginning
1/1/x0
End of lease term: 12/31/x5

Book value of equipment under lease at inception: $35,000
Market value of equipment under lease at inception: $50,000
Remaining useful life of equipment at inception: 9 years
Expected residual value at end of lease term: $4,000
Interest rate used by lessor and lessee: 10%
Assuming the lessee will capitalize this lease, what is the amount of the net lease liability at
inception, before the first payment is made?
A) $50,166 B) $60,000 C) $64,000 D) $47,908
Answer: D
Explanation: A)
B)
C)
D)
34) With respect to a lessor's indirect costs, under ASPE: 34)

A) These should be expensed for both direct financing and sales-type leases.
B) These should be expensed under direct financing leases and capitalized under
sales-type leases.
C) These should be capitalized under direct financing leases and expensed under
sales-type leases.
D) These should be capitalized for both direct financing and sales-type leases.
Answer: A
Explanation: A)
B)
C)
D)
35) A 5-year lease contract is signed on 1/1/x1 calling for $4,000 to be paid by the lessee on 35)
12/31/x1, and $6,000 on 12/31/x2, x3, and x4. Total lease payments over the lease term
are therefore $22,000. The lessee expects to use the leased asset evenly throughout the
lease term, which ends 12/31/x4. No payment is due in 20x2. The entry recorded by the
lessee for this operating lease, on 12/31/x1 includes which of the following?
A) dr. rent expense $4,400 B) dr. rent expense $4,000
C) cr. rent payable $200 D) dr. prepaid rent $400
Answer: B
Explanation: A)
B)
C)
D)
16
36) ABC Inc. leased a jet from JKL Inc., a company that leases jet aircraft, on January 1st, 36)
Year 1. Terms of the lease are as follows:
6 annual payments of $8,000,000 to be made every January 1st, starting on January 1st,
Year 1.
ABC's incremental borrowing rate is 12%. ABC Inc. has not been made aware of JKL's
borrowing rate.
Both companies follow IFRS.
The jet has a fair value of $38,000,000 at the start of the lease. JKL estimates that the jet
will be worthless at the end of the lease term.
There are no executory costs, however JKL, will incur $2 million in direct costs at the start
of the lease.
ABC Inc. depreciates all assets on a straight line basis.
Both companies have determined that their respective leases qualify as finance leases.
As a result of the information provided above, ABC would show total expenses of which
of these following amounts for Year 2?
A) $9,084,963 B) $9,582,522 C) $10,046,510 D) $9,055,557
Answer: B
Explanation: A)
B)
C)
D)
37) When a lessee measures the present value of future rentals to be capitalized under a 37)
finance lease, identifiable payments expected to be paid by the lessee to cover taxes,
insurance, and maintenance should be:
A) included in the present value of the future rentals to be capitalized.
B) capitalized, but at a different discount rate and reported in a different account than
the present value of the future rental payments.
C) excluded from the present value of the future rentals to be capitalized.
D) capitalized, but at a different discount rate and for a relevant period that usually is
different than for the future rental payments.
Answer: C
Explanation: A)
B)
C)
D)
17
38) The inception of a lease is 1/1/x1. A third party guarantees the residual value of the asset 38)
under lease, estimated to be $12,000 at 1/1/x6, the end of the lease term. Annual lease
payments are $10,000 due each December 31 beginning 12/31/x1. The last payment is
due 12/31/x5. Both the lessor and lessee use 10% as the interest rate. The remaining
useful life of the asset was 6 years at inception. What is the net asset balance for the lessor
and net liability balance for the lessee, at inception (rounded to the nearest dollar)?
Net asset (lessor) Net liability (lessee)

1 $45,359 $45,359
2 $37,908 $47,908
3 $45,359 $37,908
4 $37,908 $45,359
5 $47,119 $38,339
A) Choice 1 B) Choice 2 C) Choice 3 D) Choice 4 E) Choice 5

Answer: C
Explanation: A)
B)
C)
D)
E)
39) The depreciation period used by the lessee for a depreciable leased asset must be: 39)
A) the remaining life of the asset from the lease inception.
B) the same period that was used by the lessor.
C) the term of the lease.
D) at most the term of the lease but possibly longer if title is transferred at end of lease.
Answer: D
Explanation: A)
B)
C)
D)
40) An asset with a market value of $100,000 is leased on 1/1/x0. Five annual lease 40)
payments are due each January 1 beginning 1/1/x0. The lessee guarantees the $40,000
residual value as of 12/31/x4, the last day of the lease term. The lessor's implicit interest
rate is 8%. What is the annual lease payment?
A) $18,227 B) $23,191 C) $16,877 D) $25,046
Answer: C
Explanation: A)
B)
C)
D)
18
41) A lessee is attempting to circumvent the accounting rules, which require lease 41)
capitalization. Which of the following is most likely to lead to classification of a lease as
an operating lease for the lessee?
A) increase the term of the lease. decrease annual executory costs
B) attempt to reduce the lessee's borrowing rate
C) contract provides for a third-party guarantee of residual value
D) contract provides that lessee pays executory costs
Answer: C
Explanation: A)
B)
C)
D)
42) While only certain leases are currently accounted for as a sale or purchase, there is 42)
theoretical justification for considering all leases to be sales or purchases. The principle
reason that supports this idea is that:
A) during the life of the lease, the lessee can effectively treat the property as if it were
owned by the lessee.
B) all leases are generally for the economic life of the property and the residual value
of the property at the end of the lease is minimal.
C) at the end of the lease, the property usually can be purchased by the lessee.
D) a lease reflects the purchase or sale of a quantifiable right to the use of the property.
Answer: D
Explanation: A)
B)
C)
D)
43) The term usually used to describe the situation where a lessee has an option to purchase 43)
the leased property at a price that is sufficiently lower than its fair market value so that
the exercise of the option appears reasonably assured is:
A) bargain renewal option. B) assured purchase option.
C) bargain purchase option. D) bargain buy-out option.
Answer: C
Explanation: A)
B)
C)
D)
19
44) What is the cost basis of an asset acquired by a lease, which is in substance an instalment 44)
purchase?
A) The present value of the market price of the asset discounted at an appropriate rate
as an amount to be received at the end of the lease
B) The sum of the future minimum lease payments under the lease
C) The present value of the future minimum lease payments under the lease (exclusive
of executory costs and any profit thereon) discounted at an appropriate rate
D) The net realizable value of the asset determined at the date of the lease agreement
plus the sum of the future minimum lease payments under the lease
Answer: C
Explanation: A)
B)
C)
D)
45) ABC INC. entered into a sales-type lease to lease JKL an asset that cost ABC INC. 45)
$120,000. The lease agreement requires five annual year-end rentals of $40,000 each.
ABC INC. used a 15 percent interest rate to compute the rentals. The dealer's profit (or
loss) that ABC INC. recognized was:
A) $14,086 gain. B) $18,000 gain. C) $14,086 loss. D) $80,000 gain.
Answer: A
Explanation: A)
B)
C)
D)
46) What are the three types of period costs that a lessee experiences with finance leases? 46)
A) Executory costs, finance expense, and lease expense.
B) Depreciation expense, executory costs, and lease expense.
C) Finance expense, depreciation expense, and executory costs.
D) Lease expense, finance expense, and depreciation expense.
Answer: C
Explanation: A)
B)
C)
D)
20
47) In a sale and leaseback situation 47)
A) the lessee immediately recognizes any loss on sale up to the amount of the
difference between carrying value and fair value
B) the lessor recognizes all losses on the sale immediately but must defer and amortize
all gains
C) if the present value of the lease payments is equal to or less than 90% of the fair
value of the property, the lessee recognizes the entire gain or loss on sale
immediately
D) all gains and losses are deferred and amortized by the seller
Answer: A
Explanation: A)
B)
C)
D)
48) RST entered into a direct financing lease agreement, which required rentals of $9,600, 48)
each year-end. The lease term was for ten years and a 14 percent rate of return is
expected by RST. The cost of the machine for RST was (rounded to the nearest dollar):
A) $82,560 B) $96,000 C) $109,440 D) $50,075
Answer: D
Explanation: A)
B)
C)
D)
49) The estimated residual value of a depreciable leased asset at the end of the lease term is: 49)
A) an important factor in how the lessor and lessee must account for the lease.
B) added to the bargain purchase option at the expiration of the lease.
C) used by the lessor to compute the annual amount of depreciation expense.
D) always guaranteed by either the lessor or the lessee.
Answer: A
Explanation: A)
B)
C)
D)
21
50) If the title to a leased asset does not transfer to the lessee at the end of the lease term, but 50)
the lessee guarantees the residual, what is the period and residual value used by the lessor
to depreciate the leased asset?
Period Residual value

1 Lease term 0
2 Lease term Lessee guarantee
3 Remaining life at inception Lessee guarantee
4 Remaining life at inception 0

Answer: B
Explanation: A)
B)
C)
D)
51) XYZ leased a tract of land for a 20-year term. The lease agreement did not contain a 51)
bargain purchase option, and consequently, the land will revert back to the lessor at the
end of the lease term. At the inception of the lease, XYZ initiated construction on a small
building on the land. The building was completed at the end of the third year of the lease,
at a cost of $60,000. The building was a permanent structure on the land. Its estimated
life was 20 years and was expected to have no residual value. XYZ should record annual
depreciation (straight-line) on the building of:
A) $3,000 B) $6,000 C) $3,529 D) $2,400
Answer: C
Explanation: A)
B)
C)
D)
22
52) ABC INC. leased a new machine from QRS on July 1, 2014, under a lease with the 52)
following pertinent information:
Lease term 10 years

Annual rental payable at the beginning of each lease year $30,000
Useful life of the machine 12 years
Implicit interest rate 14 percent
Present value of an annuity of $1 in advance for 10 periods 5.95
at 14 percent
Present value of $1 for 10 periods at 14 percent 0.27
ABC INC. has the option to purchase the machine at the end of the lease term, by paying
$40,000, which approximates the expected fair value of the machine on the option
exercise date. The cost of the machine on QRS's accounting records is $150,000. On July
1, 2014, ABC INC. should record a net capitalized leased asset of:
A) $178,500 B) $190,000 C) $150,000 D) $189,300
Answer: A
Explanation: A)
B)
C)
D)
53) RST leased equipment from MNO to be used in its warehouse. The lease term is five 53)
years. RST spent $5,000 for ordinary repairs during the second year of the lease. RST
should:
A) amortize the $5,000 over the life of the lease on a reasonable basis.
B) capitalize the $5,000 permanently in the lease account.
C) write off $5,000 at the end of the lease term.
D) expense the $5,000 immediately.
Answer: D
Explanation: A)
B)
C)
D)
23
54) If the title to a leased asset does not transfer to the lessee at the end of the lease term, and 54)
no party guarantees the residual, what is the period and residual value used by the lessor to
depreciate the leased asset?

1 Lease term 0
2 Lease term Residual value at end of term
3 Remaining life at inception Residual value at end of term
4 Remaining life at inception 0

Answer: A
Explanation: A)
B)
C)
D)
55) XYZ agreed to lease an industrial machine that cost $108,000 to RST for six years. The 55)
lease was a direct financing lease and a 12 percent interest rate was used to calculate the
annual lease payments, which were payable at the end of each year. The amount of each
annual rental was:
A) $44,402 B) $20,160 C) $18,000 D) $26,268
Answer: D
Explanation: A)
B)
C)
D)
56) An asset with a market value of $100,000 is leased on 1/1/x0. Five annual lease 56)
payments are due each January 1 beginning 1/1/x0. The unguaranteed residual value on
12/31/x4, the last day of the lease term, is estimated at $40,000. The lessor's implicit
interest rate is 8%. What is the annual lease payment?
A) $25,046 B) $16,877 C) $23,191 D) $18,227
Answer: C
Explanation: A)
B)
C)
D)
24
57) If the title to a leased asset transfers to the lessee at the end of the lease term, what is the 57)
period and residual value used by the lessor to depreciate the leased asset?

1 Remaining life at inception Residual value at end of term
2 Original useful life Residual value at end of life
3 Remaining life at inception Residual value at end of life
4 Lease term Residual value at end of term

Answer: C
Explanation: A)
B)
C)
D)
58) On December 1, 2014, XYZ leased office space for its own use for 10 years at a monthly 58)
rental of $15,000. On December 31, 2014, XYZ paid the lessor the following amounts:
Refundable rent deposit (for possible property damage) $20,000

First month's rent 15,000
Rent for last month of year 10 (paid in advance) 15,000
Installation of new walls and offices 96,000
Total $146,000
The entire amount of $146,000 was reported as rent expense in 2014 because it is an
operating lease. What amount should XYZ have reported as expense for the year ended
December 31, 2014?
A) $30,800 B) $15,000 C) $15,800 D) $96,000
Answer: C
Explanation: A)
B)
C)
D)
25
59) For the lessor, under a sales-type lease, the excess of the normal sales price (i.e., current 59)
market) of the leased asset over its cost (or carrying amount) should be recognized as
revenue by the lessor:
A) in equal amounts during the lease term.
B) in decreasing amounts during the lease term.
C) in full at the inception date of the lease.
D) in increasing amounts during the lease term.
Answer: C
Explanation: A)
B)
C)
D)
60) Which of the following is not a possible advantage of long-term leases? 60)
A) Ability to always claim CCA and depreciation.
B) Protection from interest rate changes.
C) 100% financing.
D) Flexibility.
Answer: A
Explanation: A)
B)
C)
D)
61) LOR leased a computer to LES which cost the lessor $8,000. The terms of the lease 61)
specify four years, an annual interest rate of 15 percent, and four year-end rental
payments. The lease qualifies as a finance lease (direct financing). The lessor will get the
computer after the fourth year and its residual value at that time is estimated to be
$1,000. The amount of each rental payment is (round to the nearest dollar):
A) $2,000 B) $2,501 C) $2,602 D) $2,335
Answer: C
Explanation: A)
B)
C)
D)
26
LAS sells the building to BH on 1/1/2014 for $2,900,000 (which was the building's fair
value on that date) and immediately leases it back for $500,000 per year for 10 years.
The historical cost of the building was $9,000,000 and accumulated amortization
amounted to $7,000,000. Part of the journal entry to record these transactions would
include:
A) a credit to building for $900,000.
B) a credit to gain on sale for $900,000.
C) a credit to lease liability for $900,000.
D) a credit to deferred gain for $900,000.
Answer: D
Explanation: A)
B)
C)
D)
follows:

Inc.
Assuming that this qualifies as a finance lease, what would be the amount of DEF Inc's
annual depreciation as per IFRS (rounded)?
A) $10,000 B) $9,901 C) $10,076 D) $5,000
Answer: B
Explanation: A)
B)
C)
D)
27
64) At the inception of a finance lease which calls for payments on an annuity due basis, the 64)
lessee typically debits:
A) rent expense. B) leased asset.
C) lease receivable. D) lease expense.
Answer: B
Explanation: A)
B)
C)
D)
65) On December 31, 2015, JKL leased a new machine from MNO. The following 65)
information relates to the lease transaction:
* the machine has an estimated useful life of seven years, which coincides with the lease
term.
* lease rentals consist of seven equal annual payments of $100,000, the first of which was
paid on December 31, 2015.
* MNO's implicit interest rate is 12 percent, which is known by JKL.
* JKL's incremental borrowing rate is 14 percent at December 31, 2015.
At the inception of the lease, JKL should record a capitalized lease liability of (choose the
amount closest to your answer):
A) $511,000 B) $489,000 C) $411,000 D) $500,000
Answer: A
Explanation: A)
B)
C)
D)
66) LMN made the following journal entry relating to a finance lease: 66)
Cash XXXX
Lease receivable XXXX
Interest revenue XXXX
Therefore, LMN must be the:

A) lessee. B) either the lessee or lessor.
C) lessor. D) third party guarantor.
Answer: C
Explanation: A)
B)
C)
D)
28
67) LMN leases construction equipment on sales-type leases. LMN wants to record a $7,000 67)
dealer's profit on assets leased, each of which cost $60,000. What annual year-end rentals
should LMN quote to earn a 12 percent return on 8-year leases?
A) $9,380 B) $6,625 C) $8,375 D) $13,487
Answer: D
Explanation: A)
B)
C)
D)
68) LMO leased an asset for use in its factory. The lease specified that LMO was to make 68)
annual payments of $2,818 payable at the end of each year. The lessor classified the lease
as a direct financing lease because LMO was allowed to lease the asset at cost of $14,000
(i.e., the present value of the lease payments). The lessor received a 12 percent rate of
return on the lease. The estimated residual value at the end of the lease term is zero. If
the lease was classified as a finance lease by LMO, how much annual depreciation (using
SL) should LMO record?
A) $1,400 B) $1,750 C) $2,818 D) $1,310
Answer: B
Explanation: A)
B)
C)
D)
69) Which of the following are the required operating lease note disclosure requirements for 69)
the lessee?
1. Minimum lease payments

2. Contingent Rents
3. Scheduled lease payments for the next year
4. Scheduled lease payments in total for the next remaining years
5. Scheduled lease payments in total for all years.
A) 1, 2 & 3.
B) 1, 2, 3, 4, & 5.
C) 1& 2.
D) 1, 2, 3 & 4.
E) 1, 2, & 5.
Answer: B
Explanation: A)
B)
C)
D)
E)
29
70) The amount of each rental payment on a sales type lease is based on the: 70)
A) cost of the asset plus interest. B) cost of the asset, profit, and interest.
C) cost of the leased asset. D) cost of the asset plus profit.
Answer: D
Explanation: A)
B)
C)
D)
71) A lease agreement includes the following provisions: 71)
Inception: 1/1/x0
Annual lease payments of $6,000 are due 12/31/x0, x1, x2
Annual lease payments of $4,000 are due 12/31/x3, x4, x5
There are 6 lease payments in all
Lessor's implicit rate of return: 12%
This is a finance lease to the lessor
How much interest revenue is recognized in 20x0 by the lessor (assume a calendar year
fiscal year)?
A) $2,118 B) $3,419 C) $2,550 D) $3,600
Answer: C
Explanation: A)
B)
C)
D)
72) Under a finance lease that includes a bargain purchase option (BPO), how is depreciation 72)
on the asset under lease recognized by:
Lessor Lessee
1 Not recognized Depreciate over lease term
2 Depreciate over remaining life Depreciate over remaining life
3 Not recognized Depreciate over remaining life
4 Depreciate over remaining life Not recognized

Answer: C
Explanation: A)
B)
C)
D)
30
73) When the lessee guarantees the residual value at the end of the lease term, for accounting 73)
purposes, the:
A) annual rentals will always be less than they would have been if the residual value
was not guaranteed.
B) annual rentals will always be more than they would have been if the residual value
was not guaranteed.
C) guaranteed residual value does not affect the annual rentals because it is a cash flow
at the end of the lease term.
D) annual rentals will be the same as they would have been if the residual value was
not guaranteed.
Answer: D
Explanation: A)
B)
C)
D)
74) RST entered into a sales-type lease with EFG to rent special equipment for six years. The 74)
equipment cost $40,000 and RST will earn a $4,000 dealer's profit and 12 percent
interest revenue. Therefore, RST will receive year-end lease payments of:
A) $10,702 B) $8,213 C) $7,333 D) $12,090
Answer: D
Explanation: A)
B)
C)
D)
31
follows:

Inc.
What would be the amount of finance revenue that ABC Inc. would recognize throughout
the lease?
A) $20,000 B) $23,000 C) $5,000 D) $15,000
Answer: A
Explanation: A)
B)
C)
D)
32
76) On January 1, 2014, LOR leased a machine (original cost $60,000) to LES for a 5-year 76)
period at an implicit interest rate of 15 percent. The lease qualified as a direct financing
lease and the annual lease payments ($17,306) are made each December 31. LOR
retained the $4,000 estimated unguaranteed residual value (i.e., the machine reverts to
LOR at the end of the lease term). Therefore, at inception date (January 1, 2014), LOR's
net receivable and LES's liability would be (round to the nearest dollar):
LOR Receivable LES Liability

1 $60,000 $60,000
2 $58,011 $58,011
3 $60,000 $58,011
4 $58,011 $60,000

Answer: C
Explanation: A)
B)
C)
D)
77) WXZ entered into a direct financing lease with TUV for the use of an asset which cost 77)
WXZ $240,000. The lease agreement contained a bargain purchase option effective
immediately after the fifth rental, which provided that TUV could purchase the asset at
that time. The estimated life of the asset was 10 years with an estimated residual value of
$400. TUV's annual depreciation expense is (use straight- line):
A) $23,960 B) $48,000 C) $22,200 D) $44,400
Answer: A
Explanation: A)
B)
C)
D)
78) What amount of sales is recognized by the lessor in a sales type lease when the residual 78)
value is unguaranteed?
A) Market value of the asset leased.
B) Cost of asset leased less present value of unguaranteed residual value.
C) Cost of asset leased.
D) Market value of asset leased less present value of unguaranteed residual value.
Answer: D
Explanation: A)
B)
C)
D)
33
follows:

Inc.
Assuming that this qualifies as a finance lease, at what amount would DEF Inc. capitalize
the leased machinery at the inception of the lease as per IFRS (rounded)?
A) $95,907 B) $99,012 C) $100,000 D) $100,763
Answer: B
Explanation: A)
B)
C)
D)
80) The basic accounting issue for lessors is: 80)

A) revenue recognition during the lease term.
B) expense recognition during the lease term.
C) determination of the cost of the leased asset.
D) computing depreciation on the leased asset.
Answer: A
Explanation: A)
B)
C)
D)
81) The amount of each rental payment on a sales type lease includes: 81)
A) a return of cost, and interest. B) interest and profit.
C) a return of cost, interest, and profit. D) a return of cost.
Answer: C
Explanation: A)
B)
C)
D)
34
82) Under a sales-type lease, the difference between the cost of the leased asset and the lease 82)
receivable is accounted for by the lessor and lessee as follows:
Lessor Lessee
1 Gross margin Not recognized
2 Interest revenue Not recognized
3 Gross margin Interest expense
4 Interest revenue Included in capitalization of the leased asset
5 Gross margin Included in capitalization of the leased asset
A) Choice 1 B) Choice 2 C) Choice 3 D) Choice 4 E) Choice 5

Answer: E
Explanation: A)
B)
C)
D)
E)
83) All of the following are methods of avoiding capitalization except: 83)
A) use of a third party. B) shorten the lease term.
C) use of contingent rent. D) legal agreement.
Answer: D
Explanation: A)
B)
C)
D)
35
84) On January 1, 2014, WXY signed an operating lease agreement, which required $5,800 84)
annual rentals to be paid at the end of each year. The accounting period ends December
31. At the end of 2014, WXY (lessee) should make the following entry:
Rent paid in advance 5,800

Cash 5,800
Leased asset 5,800

Cash 5,800
Rent expense 5,800

Lease liability 5,800
Rent expense 5,800

Cash 5,800
Answer: D
Explanation: A)
B)
C)
D)
85) The appropriate valuation of an operating lease on the balance sheet of a lessee is: 85)
A) the absolute sum of the lease payments.
B) zero unless the lessee made a prepayment of rent.
C) the present value of the sum of the lease payments discounted at an appropriate rate.
D) the market value of the asset at the date of the inception of the lease.
Answer: B
Explanation: A)
B)
C)
D)
36
86) In a sale and leaseback arrangement, the lessee is also: 86)
A) a third party guarantor B) the buyer
C) the new owner of the property D) the seller
Answer: D
Explanation: A)
B)
C)
D)
87) Which of the following statements best describes the finance lease guidelines under 87)
ASPE from the lessee's point of view?
A) The present value of the minimum lease payments must be equal to 90% or more of
the asset's fair value.
B) The lease term must be at least 75% of the asset's life.
C) The criteria for finance leases is met if either the lease term is at least 75% of the
asset's life or the present value of the minimum lease payment is equal to 90% or
more of the asset's fair value.
D) The criteria for finance leases are met if the lease term is at least 75% of the asset's
life AND the present value of the minimum lease payment is equal to 90% or more
of the asset's fair value.
Answer: B
Explanation: A)
B)
C)
D)
88) If the lessor records unearned rent at the inception of a lease, then the lease must: 88)
A) be a direct financing lease. B) be an operating lease.
C) contain a bargain purchase option. D) be an annuity due.
Answer: B
Explanation: A)
B)
C)
D)
37
89) A lease with a three-year term calls for a $5,000 payment at the end of each of those 89)
years. The three payments are the only ones required in the lease. The residual value at
the end of the lease term is not guaranteed. The asset reverts to the lessor at the end of
the term. The lessee has no way of knowing the unguaranteed residual value at the end of
the lease term, or the one at the end of the asset's useful life, or the total useful life of the
asset at inception. However, the lessee does know the lessor's implicit rate (10%), and
the asset's fair market value at inception ($14,000). The lessee's borrowing rate on
similar debt is 8%. Therefore:
A) lessee has a finance lease as the lease term is at least 75% of the asset's remaining
life at inception.
B) lessee has an operating lease as none of the four criteria are fulfilled.
C) lessee has a finance lease as the present value of lessee minimum lease payments
exceeds 90% of the asset's fair market value at inception.
D) lessee has an operating lease as the present value of lessee minimum lease payments
is less than 90% of the asset's fair market value at inception
E) the 90% criterion does not apply in this case
Answer: C
Explanation: A)
B)
C)
D)
E)
38
90) On January 1, 2014, BE Company collected a $15,000 cash, non-refundable, bonus 90)
payment on an operating lease. Assuming a 12 percent interest rate and a five-year lease
term, the lease bonus amortization journal entry for 2014, if the interest method is used,
is:

Rent revenue 3,000
Cash 15,000
Rent revenue 15,000
Lease receivable 3,000

Rent revenue 3,000

Rent revenue 2,361
Answer: D
Explanation: A)
B)
C)
D)
91) Lessee ABC INC. leased from Lessor QRS a machine that cost $35,000, which was 91)
properly classified as a finance lease by both parties. Assume the lessor used a 12 percent
implicit interest rate and that the lessee was informed of that rate. The lease did not
include a bargain purchase option and the estimated residual value at termination of the
lease was zero. Equal semi-annual lease payments are to be made at the start of each
such period, including one on the date the lease was signed. The amount of each
semi-annual payment, assuming a five-year lease term, would be:
A) $9,709 B) $2,074 C) $2,916 D) $4,755 E) $4,486
Answer: E
Explanation: A)
B)
C)
D)
E)
39
LAS sells the building to BH on 1/1/2014 for $1,900,000 (the building's fair value on
that date was $1,800,000) and immediately leases it back for $500,000 per year for 10
years. The remaining life of the building is estimated at 20 years. The historical cost of
the building was $9,000,000 and accumulated amortization amounted to $7,000,000.
Assuming that ASPE applies, and that the lease qualifies as a finance lease, the net effect
of this transaction on the statement of comprehensive income in the year of sale would
be:
Answer: D
Explanation: A)
B)
C)
D)
93) In a sale and leaseback arrangement, the lessee is also: 93)

A) the seller. B) a third party guarantor.
C) the new owner of the property. D) the buyer.
Answer: A
Explanation: A)
B)
C)
D)
94) If the residual value of a leased asset turns out to be more than the amount guaranteed by 94)
the lessee, the:
A) lessor must pay the lessee the amount of the excess.
B) lessee may reduce depreciation expense for the prior year, through a prior period
adjustment, to take into account the excess.
C) lessor is under no obligation to compensate the lessee for the excess.
D) lessee may reduce the annual rentals for the excess.
Answer: C
Explanation: A)
B)
C)
D)
40
95) CDE leased equipment from HIJ on December 31, 2014, for a 10-year period (also the 95)
useful life of the asset). Equal annual payments under the lease are $50,000 and are due
on December 31 of each year. The first payment was made on December 31, 2014, and
the second payment was made on the next due date. The present value at December 31,
2014, of the minimum lease payments over the lease term discounted at 10 percent (the
implicit rate computed by HIJ and known by CDE) was $338,000. CDE's incremental
borrowing rate was 12 percent at December 31, 2014. The lease is appropriately
accounted for as a finance lease by CDE. What should be the balance in CDE's liability
under finance lease account at December 31, 2015?
A) $266,800 B) $272,560 C) $400,000 D) $303,980
Answer: A
Explanation: A)
B)
C)
D)
96) ABC INC. leased equipment to XYZ on January 1, 2013. The lease is for a 9-year period 96)
expiring January 1, 2022. The first equal annual payment of $400,000 was made on
January 1, 2013. The cash selling price of the equipment is $2,347,500, which is equal to
the present value of the lease payments at 10 percent. ABC INC. had purchased the
equipment for $2,100,000. The lease is appropriately recorded as a sales-type lease by
ABC INC. What amount of interest income should ABC INC. record in 2013 as a result
of the lease?
A) $210,000 B) $280,000 C) $234,750 D) $194,750
Answer: D
Explanation: A)
B)
C)
D)
41
97) A company became a lessee by leasing equipment on January 1, 2014 from a lessor. The 97)
lease has the following characteristics:
Original useful life of asset 14 years

Both lessor and lessee use 10% for lease capitalization
Market value of equipment at lease inception $200,000
Book value of equipment at lease inception $150,000
Remaining useful life of equipment at inception 10 years
A third party guarantees the entire residual value of $31,887
Six end-of-year lease payments are due beginning
December 31, 2014 in the amount of $41,788
The lease term ends December 31, 2019

Assume this is a finance lease for both parties. What is the present value of minimum lease
payments for the lessee?
A) $180,000 B) $178,233 C) $181,998 D) $194,566 E) $200,000
Answer: C
Explanation: A)
B)
C)
D)
E)
98) When the lessee guarantees only a portion of the estimated residual value, the: 98)
A) lessor's and lessee's accounting entries will be symmetrical.
B) guaranteed portion is disregarded when computing the annual rentals.
C) lessee only takes into account the guaranteed portion when computing depreciation
expense.
D) lessee will never have to compensate the lessor for the excess of the guaranteed
amount over the actual residual value.
Answer: C
Explanation: A)
B)
C)
D)
42
99) Amanda Company leased an office building for six years for an annual rent of $170,000. 99)
The lessor agreed to forgive the first year of the lease (i.e. payments would not begin
until the second year). The entry in the second year would include a debit to:
A) rent expense-some other amount. B) rent expense-$28,333.
C) rent expense-$170,000. D) rent expense-$141,667.
Answer: D
Explanation: A)
B)
C)
D)
100) A lessee capitalized a lease with a 1/1/x1 inception and which required annual lease 100)
payments of $5,000 to be paid each December 31 beginning 12/31/x1. The lessee is to
pay an additional $200 each December 31 for maintenance and insurance for the year
ending on that date. The last lease payment is due 12/31/x6, on which date the title to the
asset transfers to the lessee. The asset is expected to be used by the lessee until 12/31/x9
at which time the asset will have no residual value. What is the total expense related to
the lease recognized by the lessee in 20x4? Both lessor and lessee use 10%.
A) $4,797 B) $6,008 C) $4,598 D) $2,378 E) $7,620
Answer: A
Explanation: A)
B)
C)
D)
E)
101) A lessee that enters into a finance lease must disclose which of the following? 101)
1) Any significant finance lease arrangements.

2) Any contingent rent recognized as expense during the period.
3) The net carrying value of each class of leased asset at the reporting date.
4) Total future minimum lease payments.
5) A reconciliation between total minimum future lease payments and their present value.
A) 1, 2, 3, 4 & 5. B) 1, 2 & 3. C) 1, 2 & 4. D) 1, 2, 3 & 4.
Answer: A
Explanation: A)
B)
C)
D)
43
102) When the lessee guarantees the residual value at the end of the lease term, the: 102)
A) lessor will use this amount in computing periodic depreciation expense.
B) lessee may have to pay the lessor additional cash if the actual residual value is not
equal to the estimated residual value.
C) lessee will have to pay the lessor additional cash because the guaranteed residual
value was included in computing the annual rental amounts.
D) lessor will receive an additional cash flow at the end of the lease term.
Answer: B
Explanation: A)
B)
C)
D)
103) What amount of sales is recognized by the lessor in a sales type lease when the residual 103)
value is guaranteed?
A) Market value of the asset leased.
B) Cost of asset leased less present value of guaranteed residual value.
C) Cost of asset leased.
D) Market value of asset leased less present value of guaranteed residual value.
Answer: A
Explanation: A)
B)
C)
D)
104) The lessor recognizes a profit at the inception of the lease when the lease is classified as 104)
a(n):
A) sales-type lease. B) direct financing lease.
C) non-finance lease. D) operating lease.
Answer: A
Explanation: A)
B)
C)
D)
105) Initial direct costs are: 105)

A) non-refundable down payments made by the lessee.
B) incremental costs incurred by the lessor in negotiating and consummating the lease
agreement.
C) insurance, property taxes, and maintenance costs.
D) interest and annual lease rental paid.
Answer: B
Explanation: A)
B)
C)
D)
44
LAS sells the building to BH on 1/1/2014 for $1,900,000 (the building's fair value on
that date was $1,800,000) and immediately leases it back for $500,000 per year for 10
years. The remaining life of the building is estimated at 20 years. The historical cost of
the building was $9,000,000 and accumulated amortization amounted to $7,000,000.
Assuming that ASPE applies, and that the lease does not qualify as a finance lease, the
net effect of this transaction on the statement of comprehensive income in the year of
sale would be:
Answer: D
Explanation: A)
B)
C)
D)
107) Which of the following would be excluded from both the minimum lease payments and 107)
net lease liability at inception for the lessee?
A) Bargain purchase option. B) Annual lease payments
C) Lessee guarantee of residual. D) Third party guarantee of residual.
Answer: D
Explanation: A)
B)
C)
D)
108) Under ASPE, a lessor may classify a lease as a finance lease if: 108)
A) Either the credit risk relating to the lease and lessee are normal OR the lessor's
unreimbursable costs can be reasonably estimated in order to meet the finance lease
criteria under ASPE.
B) Both the credit risk relating to the lease and lessee are normal AND the lessor's
unreimbursable costs can be reasonably estimated in order to meet the finance lease
criteria under ASPE.
C) The lessor's unreimbursable costs can be reasonably estimated.
D) The credit risk relating to the lease and lessee are normal.
Answer: B
Explanation: A)
B)
C)
D)
45
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be mentioned, but these will suffice to indicate the light which
Chronicles throws upon the conditions of the post-exilic community.
Much more important, however, is the insight we gain into the

methods and principles, the ideals and the ideas which prevailed in
Temple circles in Jerusalem during the third century b.c. Chronicles,
like all distinctive books, is necessarily eloquent of its author’s mind
and character. Now the Chronicler was a Levite of the Levites, and
no doubt typical of his class at this period. But we know that this
period was of the highest importance in the formation of the Old
Testament, and it was precisely at the hands of the orthodox Levitical
circles that many books of the Jewish Scriptures, especially the
Laws, the Histories, and the Psalms, underwent the revision which
brought them approximately to their present form. It is therefore
extremely valuable that we should be able to study the psychological
characteristics of a typical Levite of that age. From this point of view
hardly any part of Chronicles is without significance. Thus the
midrashic stories, whatever their value otherwise, at least reveal a
great deal regarding the mental and moral outlook of the writer and
his contemporaries.
“Chronicles,” it has been said (Bennett, Expositor’s Bible, p. 20),

“is an object-lesson in ancient historical composition.” But it ought
also to teach us that history is something more than the record of
occurrences. Facts are fundamental, but of profound importance
also is the attitude in which we approach them.
To sum up the whole matter of this section. Compared with

Samuel‒Kings, Chronicles is of little or no value as a record of the
history of the Judean kingdom. Where it differs from those books, in
almost all cases the earlier account is the more accurate and
trustworthy. In what Chronicles adds, there may sometimes be found
traditional developments of genuine historical facts. Even if they
should prove to be few, it is possible that there may be among them
some points of high importance for our understanding of the Old
Testament records. Finally, as a product of the Greek period,
Chronicles is very valuable in illustrating the methods, ideals, and
temperament of the Levitical classes of Jerusalem about that time.
These results are disappointing only if we insist on treating

Chronicles as a manual of early Judean history instead of as a
remarkable and in some ways unique religious work.
§ 8. The Religious Value of Chronicles

Chronicles has suffered by comparison with the fresher, more
human, history in Samuel and Kings. It has seemed to modern taste
somewhat dry and uninspiring. To the superficial reader any religious
feeling in the book is devoted to the concerns of a ritual that has long
since passed away, and with which we might in any case have little
sympathy. And, of course, the contrast is still more unfavourable if it
be made with the books which contain the noblest utterances of
Jewish faith. Job in his anguish crying “though He slay me yet will I
trust Him”; the Psalmist fearless of all ill since God is with him;
Hosea who wrote of God “I desire mercy and not sacrifice, and the
knowledge of God more than burnt offerings”—these stand on a
higher spiritual level than the Chronicler. None the less, there is
virtue, and even great virtue, in Chronicles, and failure to perceive it
only argues lack of insight on our part.
In the first place, if Temple ritual and observance of the precepts

of the Law bulk too largely in the Chronicler’s conception of the
religious life, he had much excuse for his attitude. In his day and
generation, faithfulness to Jehovah and to that moral and spiritual
interpretation of life for which the worship of Jehovah stood,
inevitably involved participation in the organised services which
centred in the Temple. Whatever its imperfections, the Temple at
Jerusalem in his time was performing a great religious work in
keeping alive zeal for Jehovah and His Law in the face of much
degenerate heathenism. Moreover it is an unfair and a false
assumption to suppose that his manifest devotion to the ritual
necessarily or probably meant that his religion was mere formalism
or his creed poorly conceived. Behind the parade of the formalities of
worship burns a living faith. The freedom with which the Chronicler
has retold the history to conform with his religious views is indeed
the measure of the force of his beliefs. We have already noted (p.
xlix) as regards one midrashic passage that it is essentially a sermon
on the need for trust in God. The Chronicler was passionately
convinced that virtue is rewarded and vice is punished. He believed
in a God supremely just yet merciful, One who rules directly and
personally in human life, destroying evil, guiding and fostering all that
is true and good. “The might of nations counted as nothing before
Him. Obedience and faith in Jehovah were more effective
instruments in the hands of Israel’s kings than powerful armies and
strong alliances.” It is easy to smile at the Chronicler’s belief that
piety is necessarily rewarded by worldly prosperity, and sin by
worldly misfortune. But, if the life and teaching of Jesus Christ have
led us to a deeper interpretation of life, that does not lessen the
virtue of the Chronicler in maintaining his faith in God’s justice and
vigilance, despite all the cruel evidences of the prosperity of the
wicked. His doctrine of reward and punishment was crude, but after
all he was striving, as best he knew how, to maintain the great
central conviction of religion that “all things work together for good to
them that love God.” Everywhere his work is dominated by the sense
of right and wrong, and a clear-eyed perception of the absolute
distinction between them. He brings all men and all things to a moral
and religious test. The imperishable worth of Chronicles will ever be
that it is the record of a man’s endeavour to present, in terms of
national experience, the eternal laws of the spiritual realm.
Finally, since the Chronicler was retelling the past in terms of the
present, we know that these beliefs of his were not rules applied in
theory to history and ignored in present practice. They were the
convictions by which his own soul lived. No one can afford to
despise a man who was prepared to walk by the light of such a faith
amid the difficulties and the perils which surrounded the enfeebled
Jerusalem of that age. As Curtis says, “it was under the tutelage of
men like the Chronicler that the Maccabees were nourished and the
heroic age of Judaism began.” We must not allow any distaste for
legalism in religion to blind us to the virtues of the post-exilic Jews.
The very rigidity of the ritual and the doctrine was essential to the
preservation of the nobler elements in the faith. In the memorable
words of Wellhausen (Prolegomena, pp. 497 f.), “At a time when all
nationalities, and at the same time all bonds of religion and national
customs were beginning to be broken up in the seeming cosmos and
real chaos of the Graeco-Roman Empire, the Jews stood out like a
rock in the midst of the ocean. When the natural conditions of
independent nationality all failed them, they nevertheless artificially
maintained it with an energy truly marvellous, and thereby preserved
for themselves, and at the same time for the whole world, an eternal
good.” Chronicles may justly claim to have played a part in that
extraordinary triumph.
§ 9. Name and Position in the Canon

Name. The Hebrew title is Dibhrē Hayyāmīm, literally The Acts
(or Sayings) of the Days. In the Greek Version (the Septuagint)
Chronicles was regarded as supplementary to Samuel and Kings,
and so received the title “[Books of] the Omitted Acts”
παραλειπομένων or “the Omitted Acts of the Kings (or Reigns) of
Judah.” This name, moreover, passed into the Latin Vulgate, “(Libri)
Paralipomenōn.” The title Chronicles seems to be due to a remark
made by St Jerome, who, in commenting on the Hebrew title, wrote
that the book might more appropriately be styled the “Chronicle of
the whole of sacred history” (Prologus in Libros Regum, edited by
Vallarsi, ix. 458). The use of the phrase is also suggested by a
similar expression (literally “the book of the Acts of the Days of...”)
found some twenty times in Kings, and commonly rendered “the
book of the chronicles of...” e.g. 1 Kings xiv. 19. On the whole,
Chronicles is a satisfactory title ¹.
¹ It is, however, open to the objection that an inexperienced
reader may make the mistake of supposing that these
references in Kings to “the book of the chronicles of the kings
of Israel [Judah]” are references to the canonical Chronicles.
Division. The division of Chronicles into two books (as in the

English Versions) probably originated in the Septuagint (LXX.); the
MSS. a and b both mark the division. It entered the English Version
through the Latin Vulgate. On the other hand, Rabbinical evidence
(Talmud, Baba Bathra 15a; and the Masōrah) and the Christian
Fathers testify that among the Hebrews the book was undivided: so
Origen (apud Eusebius Church History vi. 25, 2) and Jerome
(Domnioni et Rogatiano).
Position in Canon. In the English Version Chronicles stands next

after Kings, the Historical Books being grouped together. This
arrangement was derived from the Septuagint through the Latin
Vulgate. The order of the Hebrew Bible is different. There the books
are arranged in three sections, of which the first contains the Books
of the Pentateuch, the second includes the Historical Books from
Joshua to Kings, while the third (Hebrew “Kĕthūbhīm”) contains
Chronicles. The books of this third section seem to have been the
last to receive Canonical Authority among the Jews. Kings thus
appears to have been taken into the Canon before Chronicles.
In the Hebrew Bible the “Kĕthūbhīm” (Hagiographa) are usually

arranged thus:—first the Poetical Books (Psalms, Proverbs, Job),
next the Five Rolls or Megillōth (Canticles, Ruth, Lamentations,
Ecclesiastes, Esther), and lastly the three books Daniel, Ezra‒
Nehemiah, and Chronicles. This is the usual Hebrew tradition,
though it is surprising to find Ezra (which begins with the closing
verses of Chronicles) put before Chronicles. The wording of Matthew
xxiii. 35, however, “From the blood of Abel the righteous (see
Genesis iv. 10 f.) unto the blood of Zachariah (see 2 Chronicles xxiv.
20 ff.)” suggests that as early as our Lord’s day Chronicles was
regarded as the last, just as Genesis was the first, book of the
Hebrew Canon. It is probable, therefore, that Chronicles found its
way into the Canon after Ezra‒Nehemiah, the latter book being
needed to represent the post-exilic period of the history, whereas
Chronicles covered ground already occupied by the books of Samuel
and Kings.
§ 10. Text and Versions of Chronicles
Text. The Hebrew (Masoretic) text in Chronicles is, on the whole,
well preserved, although by no means free from textual errors
(compare 1 Chronicles vi. 28). Many of these occur, as one would
expect, in the lists of proper names. Olstead (in the American
Journal of Semitic Languages, October 1913) has given reasons for
holding that occasionally the original text of Chronicles may have
suffered from assimilation to the text of Samuel‒Kings. Further, we
note a few phrases and passages which seem to be scribal additions
(see § 3, p. xxii). An interesting scribal omission of late date is noted
on 2 Chronicles xxviii. 20. In passages which are parallel to the older
canonical books Chronicles has occasionally preserved a superior
reading, e.g. 1 Chronicles xx. 4, Hebrew and LXX. “there arose war
at Gezer” = 2 Samuel xxi. 18, “there was again war ... at Gob”; or
again, 1 Chronicles viii. 53, “Eshbaal” = 2 Samuel ii. 8 “Ishbosheth”;
or compare 1 Chronicles xiv. 14, note on go not up.
Versions. (1) Greek Versions. What is commonly called the

Septuagint (LXX.) of Chronicles is now recognised to be not the
original LXX., but a later Greek translation, which most scholars
(especially Torrey, Ezra Studies) consider to be the rendering of
Theodotion. [For criticism of the view that it is Theodotion’s rendering
see the article by Olstead mentioned above.] In the main this
rendering is a close reproduction of the Masoretic text, and of little
value except for determining the official Hebrew text of the second
century. The old LXX., unfortunately, no longer exists for 1
Chronicles i.‒2 Chronicles xxxiv.; but for 2 Chronicles xxxv., xxxvi. it
has been preserved in 1 Esdras i.—a fact of great good fortune, not
merely for the textual criticism of that passage, but for the light it
sheds on the relations and characteristics of the Greek Versions.
(2) The Old Latin Version was made from the old LXX. which is
now lost except for the last two chapters of Chronicles, as stated
above. It would therefore be of great value for criticism, but alas! only
a few fragments survive.
The later Latin Version, the Vulgate, made by Jerome, is of small

value, as it represents only the official Hebrew text.
(3) The Syriac Version, known as the Peshitṭa, is of even smaller

value for textual criticism. Unlike the close rendering of other books
in the Peshitṭa, Chronicles constantly has the characteristics of a
paraphrase rather than a translation. One example will suffice. For
“Joel the chief and Shaphat the second,” 1 Chronicles v. 12, the
Peshitṭa has “And Joel went forth at their head and judged them and
taught them the scriptures well.” The Peshitṭa is further noteworthy
for curious omissions (and substitutions), e.g. 2 Chronicles iv. 10‒22;
xi. 5‒xii. 12 (for which 1 Kings xii. 25‒30, followed by 1 Kings xiv. 1‒
9, is substituted).
For further information regarding the text and versions of

Chronicles, see the edition by Curtis, pp. 35 ff.
§ 11. Literature
Of the more recent literature on Chronicles the following is a list
of the principal works which have been consulted in the preparation
of this volume.
J. Wellhausen, Prolegomena (1885), especially chapter vi.
W. H. Bennett, The Books of Chronicles in the Expositor’s Bible

(1894).
F. Brown, Chronicles in Hastings’ Dictionary of the Bible (1898).

W. R. Smith and S. R. Driver, Chronicles in the Encyclopaedia
Biblica (1899).
I. Benzinger, Die Bücher der Chronik (1901).
R. Kittel, Die Bücher der Chronik (1902).
C. F. Kent, Israel’s Historical and Biographical Narratives (Student’s

Old Testament, 1905).
W. R. Harvie-Jellie, Chronicles in the Century Bible (1906).
E. L. Curtis and A. A. Madsen, Chronicles (the International Critical

Commentary, 1910).
S. R. Driver, Literature of the Old Testament, pp. 517‒540 (8th

edition 1909).
W. R. Smith and S. A. Cook, Chronicles in the Encyclopaedia

Britannica (1910).
C. C. Torrey, Ezra Studies (1910).
A. T. Olstead, Source Study and the Biblical Text in the American

Journal of Semitic Languages (October, 1913).
Students interested in the Hebrew text should consult Kittel’s

edition of the Old Testament in Hebrew; Kittel’s Chronicles in Hebrew
in The Sacred Books of the Old Testament (edited by P. Haupt);
Torrey’s Ezra Studies, and the commentary by Curtis and Madsen
mentioned above; also Arno Kropat, “Die Syntax des Autors der
Chronik,” in the Zeitschrift für Alttestamentliche Wissenschaft
(Beihefte) xvi. (1909).
N.B. The commentary on Chronicles according to the text of the

Authorised Version was edited in this series by the Rev. Professor
W. E. Barnes, D.D., in 1899. For this new edition which is based on
the Revised Version the present writer is entirely responsible. He
desires here to acknowledge the courtesy of Professor Barnes who
has kindly permitted the retention of notes from the first edition.
W. A. L. E.
September 1st, 1915.

THE FIRST BOOK OF
THE CHRONICLES
Chapters I.‒IX. GENEALOGIES.
Chapter I.
The Genealogies of the Peoples.
The historical narrative of the books of Chronicles commences in

chapter x. with the record of the defeat and death of King Saul on Mt
Gilboa.
The first nine chapters are occupied almost entirely by a series of

genealogical lists. Starting from the primeval age, the line is traced
from Adam to the origin of Israel, showing its place among the
nations of the ancient world. Attention is then confined to the
descendants of Israel, amongst whom the genealogies of Judah
(particularly, the line of David), of Levi, and of Benjamin, are given
prominence. Finally the ancestry of Saul, and a list of inhabitants of
Jerusalem is recorded.
The modern reader is inclined to regard these statistics as the

least important section of the book, but the fact that the bare lists of
names are so foreign to our taste should serve at least as a valuable
warning of the difference between our outlook and that of the
Chronicler. It is in the highest degree important to understand the
motives which caused the Chronicler to give these lists of names as
the fitting introduction to the history, since the same motives operate
throughout the book and determine the standpoint from which the
entire history is considered.
(1) In the first place the genealogies were not recorded by the
Chronicler simply for the archaeological interest they possess. They
served a most practical purpose, in that they helped to determine for
the Jewish community of the Chronicler’s time what families were of
proper Levitical descent and might claim a share in the privileges
pertaining thereto, and—on a wider scale—what families might justly
be considered to be the pure blood of Israel. How serious the
consequences entailed by the absence of a name from such lists
might be is well illustrated by Ezra ii. 61‒63 (= Nehemiah vii. 63‒65),
“the children of Habaiah, the children of Hakkoz ... sought their
register among those that were reckoned by genealogy, but they
were not found: therefore were they deemed polluted and put away
from the priesthood.” On the other hand the Jew who could
successfully trace his ancestry in the great lists knew himself
indubitably a member of the chosen people and was confident of his
part in the covenantal grace and in all those hopes which the faith of
Israel inspired and sustained.
(2) The practical aspect of these lists was thus essentially

connected with high religious sentiment. They were an expression of
the continuity of Israel, a declaration that the Present was one with
the Past, a witness and an assurance of the unfailing grace of
Israel’s God. The genealogies therefore are in perfect harmony with
the spirit and purpose of the Chronicler’s work—see the Introduction
§ 6.
(3) Finally, in the lists of place-names and genealogies of

inhabitants of Judah and Jerusalem, various facts of great historical
interest are preserved—see Introduction § 7, pp. xlvii f. and (e.g.) ii.
42 note.
Chapter i. contains the genealogies of the earliest age, showing

the origin of the nations. It concludes with a list of the chiefs of
Edom. The names are those given in the genealogies of Genesis i.‒
xxxvi., but the lists are abbreviated to the utmost by the omission of
statements of relationship. Evidently the Chronicler was able to
assume that the connection between the names was a matter of
common knowledge.
1‒4 (compare Genesis v. 3‒32).

A Genealogy from Adam to the Sons of Noah.
¹A DAM, Seth, Enosh; ²Kenan, Mahalalel,

Jared;
1. Seth ... Noah] This genealogy of ten antediluvian patriarchs
follows Genesis v. 3‒32 (P), the “Sethite” line as compared with
Genesis iv. 17‒24 (J) where the descent is traced through Cain.
There is some ancient connection between the list and the
Babylonian tradition of ten kings before the Flood (see Ryle,
Genesis, pp. 88 ff. in this series). For the symbols J and P, see the
Introduction p. xx.
Enosh] A poetical word which, like Adam in prose writings, was

used as a generic term for “man.”
³Enoch, Methuselah, Lamech; ⁴Noah, Shem,

Ham, and Japheth.
3. Enoch] Hebrew Ḥanôkh. In verse 33 the same name is more
correctly rendered Hanoch, but the Revised Version not unwisely
has here retained the famous name in the form (derived through the
Vulgate from the LXX.) with which the Authorized Version has made
us familiar; compare Genesis iv. 17, and v. 21.
5‒23.
The Genealogy of the Nations.
The table which follows is taken from Genesis x. 2‒29. It is

geographical rather than ethnological, i.e. neighbouring nations are
regarded as having the same descent. The world as then known is
divided into three areas of which that in the north and west is
assigned to the Sons of Japheth (5‒7), the southern to the Sons of
Ham, and the middle and eastern to the Sons of Shem (17‒23). Had
the arrangement been according to actual descent the Semitic
Zidonians, for instance, would not be described as the offspring of
Ham (verse 13).
The passage, when analysed, divides as follows: 5‒9 (a general

table of the descendants of Japheth and Ham), 10‒16 (an appendix
to the descendants of Ham), 17 (a general table of the descendants
of Shem), 18‒23 (an appendix to the descendants of Shem). Of
these four sections, the general tables, verses 5‒9 and 17, belong to
the “Priestly” narrative of the Hexateuch, whilst the two appendices,
verses 10‒16, 18‒23, are from the earlier narrative known as J. For
a full examination of the many interesting questions raised by this
account of the origin of the nations known to the Israelites the reader
must be referred to the commentaries on Genesis where such
discussion is appropriate (see Ryle, Genesis, in this series; or more
fully Skinner, Genesis, pp. 188 ff.). Here a few remarks of a general
character must suffice.
With the exception of Nimrod the names are those of nations and
tribes (e.g. Madai [Medes], Javan [Greeks]) or countries (e.g.
Mizraim [Egypt]) or cities (Zidon). The names are eponymous: that is
to say “each nation is represented by an imaginary personage
bearing its name, who is called into existence for the purpose of
expressing its unity, but is at the same time conceived as its real
progenitor”; and the relations existing or supposed to exist between
the various races and ethnic groups are then set forth under the
scheme of a family relationship between the eponymous ancestors.
This procedure may seem strange to us but it was both natural and
convenient for a period when men had not at their disposal our
scientific methods of classification. It must have been specially easy
for Semites, like Israel, who in everyday life were accustomed to call
a population the “sons of” the district or town which they inhabited.
But in truth the practice was widespread in antiquity, and, if a parallel
is desired, an excellent one may be found in the Greek traditions
respecting the origins of the several branches of the Hellenic race.
Whether the ancients believed that these eponymous ancestors
really had lived is somewhat uncertain. Probably they did, although
such names as Rodanim (verse 7) and Ludim (verse 11) where the
name is actually left in a plural form (as we might say “Londoners”)
makes it difficult to doubt that in some cases the convention was
conscious and deliberate. The notion that the chief nations of
antiquity were differentiated from one another within some three
generations of descent from a common ancestor, Noah, is plainly
inaccurate. Equally untenable is the primary conception assumed in
this table that the great races of mankind have come into being
simply through the expansion and subdivision of single families.
It must not be imagined that these facts in any way destroy the
value of the table. Historically, it is a document of great importance
as a systematic record of the racial and geographical beliefs of the
Hebrews. Its value would be increased could we determine precisely
the period when it was originally drawn up, but unfortunately it is not
possible to do so with certainty. Arguments based on the
resemblance between this table and the nations mentioned in the
books of Ezekiel and Jeremiah are inconclusive; nor does the fact
that the general tables (verses 5‒9, 17) now form part of P, the
“Priestly” document, help us greatly, for we cannot argue from the
date of the document as a whole to the date of its component laws or
traditions, which of course may be much earlier. Religiously, the
worth of this table is to be seen in the conviction of the fundamental
unity of the human race, which is here expressed. The significance
of this may best be felt if we contrast the Greek traditions which
display a keen interest in the origins of their own peoples but none at
all in that of the barbarians. Ancient society in general was vitiated
by failure to recognise the moral obligation involved in our common
humanity. Even Israel did not wholly transcend this danger, and its
sense of spiritual pre-eminence may have taken an unworthy form in
Jewish particularism; but at least, as we here see, there lay beneath
the surface the instinct that ultimately the families of the earth are
one, and their God one.
5‒7 (= Genesis x. 2‒4).

The Sons of Japheth.
⁵The sons of Japheth; Gomer, and Magog,

and Madai, and Javan, and Tubal, and
Meshech, and Tiras.
5. The sons of Japheth] The writer begins with the northern
peoples.
Gomer] to be identified with the Gimirrai of the Assyrian

monuments, the Κιμμέριοι of the Greeks, who migrated from South
Russia into Asia Minor (Pontus and Cappadocia) under the pressure
of the Scythians (Herodotus I. 103; IV. 11, 12; compare Ezekiel
xxxviii. 6, Revised Version).
Magog] In Ezekiel xxxviii. 2 (Revised Version) judgement is

denounced on “Gog, of the land of Magog, the prince of Rosh,
Meshech, and Tubal” who is represented as accompanied in his
migration by the “hordes” of Gomer and Togarmah (verse 6), “all of
them riding upon horses” (verse 15). Magog represents therefore
one of several tribes of northern nomads, possibly the Scythians.
Madai] i.e. Media or the Medes. Of the many allusions in the Old
Testament to this famous people, the first is found in 2 Kings xvii. 6;
compare also Isaiah xiii. 17; Jeremiah xxv. 25; Esther i. 3; Daniel i. 9.
The Median Empire dates from the 7th century b.c., but the Medes
are referred to by Assyrian inscriptions of the 9th century, at which
time they seem to occupy the mountainous regions to the south and
south-west of the Caspian Sea. They were the first Aryan race to
play an important part in Semitic history.
Javan] the Ionians, a branch of the Greek peoples. They were
already settled in the Aegean islands and on the west coast of Asia
Minor at the dawn of Greek history. Being a seafaring nation and
having a slave-trade with Tyre (Ezekiel xxvii. 13; Joel iii. 6 [Hebrew
iv. 6 “Grecians”]), they became known to Israel at an early date. In
some late passages of the Old Testament (e.g. Zechariah ix. 13;
Daniel viii. 21, xi. 2) Javan denotes the world-power of the Greeks,
established by the conquests of Alexander the Great and maintained
in part by his successors, in particular the Seleucid kings of Syria.
Tubal, and Meshech] compare Isaiah lxvi. 19; Psalms cxx. 5.

They are mentioned together Ezekiel xxvii. 13, xxxii. 26, xxxviii. 2, 3,
xxxix. 1; and are to be identified with the Τιβαρηνοί and Μοσχοί of
Herodotus III. 94, who are the “Tabali” and “Muski” of the
monuments. In the time of the later Assyrian Empire they lived as
neighbours in the country north-east of Cilicia, but at a later period
the Τιβαρηνοί (Tubal) lived in Pontus, and the Μοσχοί (Meshech)
further East towards the Caspian. (The Meshech of this verse is to
be distinguished from the Meshech son of Shem mentioned in verse
17.)
Tiras] Not the Thracians (so Josephus Antiquities of the Jews I.

6), but most probably the Tyrseni, a piratical people frequenting the
coasts and islands of the north Aegean. They are mentioned among
the seafarers who assailed Egypt in the reign of Merenptah.
⁶And the sons of Gomer; Ashkenaz, and

Diphath ¹, and Togarmah.
¹ In Genesis x. 3, Riphath.
6. Ashkenaz] In Jeremiah li. 27 “the kingdoms of Ararat, Minni,

and Ashkenaz” are to be summoned against Babylon. The home of
the Ashkenaz is therefore somewhere in the neighbourhood of
Ararat (Armenia); and they are apparently the Asguza of the
monuments, and perhaps may be identified with the Scythians.
Diphath] The LXX., Vulgate and some Hebrew MSS. have
Riphath (so also Genesis x. 3), which is to be preferred. The identity
of the place or people is not yet ascertained.
Togarmah] Perhaps in Armenia, but the evidence is inconclusive.

That it was a neighbour of Gomer, Tubal, and Meshech appears
probable from Ezekiel xxvii. 14, where Togarmah is mentioned as
trading with Tyre in horses and mules. Compare also Ezekiel xxxviii.
6, and the note above on Magog.
⁷And the sons of Javan; Elishah, and Tarshish,

Kittim, and Rodanim ¹.
¹ In Genesis x. 4, Dodanim.
7. Elishah] Ezekiel (xxvii. 7) addressing Tyre, “Blue and purple

from the isles of Elishah was thine awning.” Elishah has not been
identified with certainty. It has been supposed to be Carthage.
Another suggestion is Alashiya (of the Tell el-Amarna Letters) which
may be a Cilician district, or perhaps rather Cyprus; compare the
note on Kittim below.
Tarshish] generally now identified with Tartessus, a Phoenician

town in the south of Spain. This is supported by the various
references to Tarshish as a Tyrian colony rich in minerals and far
from Palestine (see, e.g. Ezekiel xxvii. 12; Jonah i. 3; Psalms lxxii.
10; 2 Chronicles ix. 21). To identify it with Tarsus, the famous town in
Cilicia, is in some ways attractive, but is on the whole less probable.
Kittim] The inhabitants of Cyprus are meant, “Kittim” being

derived from Kition (modern Larnaca), the name of one of its oldest
towns. In later times Kittim (Chittim) is used vaguely of Western
islands (Jeremiah ii. 10; Ezekiel xxvii. 6) or nations; “the ships of
Kittim” (Daniel xi. 30) are the Roman ships; “the land of Chittim”
(Χεττιείμ, 1 Maccabees i. 1) is Macedonia (1 Maccabees viii. 5).
Rodanim] No doubt the Rhodians are meant; their island was
celebrated even in the days of Homer. On the spelling Dodanim
(Revised Version margin; Genesis x. 4), compare the note on
Diphath above. The Hebrew letters r (‫ )ר‬and d (‫ )ד‬are easily
confused.
8, 9 (= Genesis x. 6, 7).
The Sons of Ham.
⁸The sons of Ham; Cush, and Mizraim, Put,

and Canaan.
8. The sons of Ham] The southern peoples are next enumerated.
Cush] The Hebrew name here transliterated Cush is several

times translated “Ethiopia” (e.g. 2 Kings xix. 9; Isaiah xviii. 1) no
doubt rightly. On the inscriptions of Asshur-bani-pal frequent mention
is made of Ku-su (Ku-u-su) “Ethiopia” in connection with Mu-ṣur
“Egypt.” The Cushites were not Negroes but a brown race like the
modern Nubians (Soudanese). The “sons of Cush,” however, seem
to be tribes located mostly on the Arabian side of the Red Sea, verse
9 below.
Mizraim] is without doubt Egypt. In form the word may be dual,

and it is generally said to mean the two Egypts, Upper and Lower.
Put] This people is mentioned among the helpers of Egypt in

Jeremiah, in Ezekiel (twice), and in Nahum. In Ezekiel xxvii. 10 it
appears among the auxiliary troops of Tyre. Put used therefore to be
identified with the Libyans of the north coast of Africa, but more
probably it denotes the Punt of the Egyptian monuments, i.e. the
African coast of the Red Sea.
Canaan] the eponym of the pre-Israelitish population of Palestine

west of Jordan. Actual racial affinities are here disregarded or
unperceived, for the Canaanites (except the Philistines and
Phoenicians on the strip of coastland) were Semites and spoke a
language closely resembling Hebrew. That they are here reckoned
as Hamites and made a “brother” of Egypt is due perhaps in part to
the frequent dominations of Palestine by Egypt, but more probably to
the political and religious antagonism between Israel and the
Canaanites, which suggested that they ought to be most closely
associated with Egypt, Israel’s traditional oppressor. Note that in
Genesis ix. 25‒27 (where hostile feeling against Canaan is
prominent) “Canaan” is not said to be the son of Ham, but takes
Ham’s place as a son of Noah (Ryle, Genesis, p. 127).
⁹And the sons of Cush; Seba, and Havilah,

and Sabta, and Raama, and Sabteca. And the
sons of Raamah; Sheba, and Dedan.
9. the sons of Cush] According to some authorities Seba and
Havilah were tribes or districts on the African coast of the Red Sea,
whilst Sabta and Raama and Sabteca were in Arabia. It is somewhat
more probable that all (except Seba) were located on the Arabian
side of the Red Sea.
Seba] In Isaiah xliii. 3 and xlv. 14 Seba (the Sabeans) is

mentioned along with Egypt and Cush, and in Psalms lxxii. 10 along
with Sheba. Probably a district on the African side of the Red Sea is
meant.
Sheba, and Dedan] Also in verse 32, where see note. Sheba is
frequently mentioned in the Old Testament (e.g. Jeremiah vi. 20; 1
Kings x. 1 ff. = 2 Chronicles ix. 1 ff.; Isaiah lx. 6) as a distant land,
rich in gold, frankincense, and precious stones. It was a flourishing
and wealthy state, at one period (circa 700 b.c.) the centre of power
and civilisation in south Arabia. Dedan was probably a merchant
tribe, specially associated with Sheba (compare Ezekiel xxxviii. 13).
10‒16 (= Genesis x. 8‒18b).

Appendix. Other Descendants of Ham.

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Intermediate Accounting Volume 2 7th

Edition Beechy Test Bank

Fair value of machinery at inception of the lease: $100,000.

Fair value of machinery at inception of the lease: $100,000.

B) Please see the following table:

Rent receivable 10,500

C) Please see the following table:

D) Please see the following table:

* Market value of the machine at inception of lease: $500,000

A) Choice 1 B) Choice 2 C) Choice 3 D) Choice 4

A) Choice 1 B) Choice 2 C) Choice 3 D) Choice 4

LMN's net Lease ABC's Lease

A) Choice 1 B) Choice 2 C) Choice 3 D) Choice 4

1) use a lessee guarantee of residual value;

Which of the above strategies will provide the desired result?

A) Choice 1 B) Choice 2 C) Choice 3 D) Choice 4

15) A bargain purchase option in a finance lease affects the: 15)

19) In a sale and leaseback situation: 19)

Finance lease Operating lease

A) Choice 1 B) Choice 2 C) Choice 3 D) Choice 4

Unearned interest revenue 10,225

B) Please see the following table:

C) Please see the following table:

Unearned interest revenue 12,000

D) Please see the following table:

30) Assume the following facts relating to a lease: 30)

Leased asset, new at inception of lease term.

Fair value of machinery at inception of the lease: $100,000.

End of lease term: 12/31/x5

34) With respect to a lessor's indirect costs, under ASPE: 34)

Net asset (lessor) Net liability (lessee)

A) Choice 1 B) Choice 2 C) Choice 3 D) Choice 4 E) Choice 5

Period Residual value

A) Choice 1 B) Choice 2 C) Choice 3 D) Choice 4

Lease term 10 years

Period Residual value

A) Choice 1 B) Choice 2 C) Choice 3 D) Choice 4

Period Residual value

A) Choice 1 B) Choice 2 C) Choice 3 D) Choice 4

Refundable rent deposit (for possible property damage) $20,000

Fair value of machinery at inception of the lease: $100,000.

Therefore, LMN must be the:

1. Minimum lease payments

71) A lease agreement includes the following provisions: 71)

A) Choice 1 B) Choice 2 C) Choice 3 D) Choice 4

Fair value of machinery at inception of the lease: $100,000.

LOR Receivable LES Liability

A) Choice 1 B) Choice 2 C) Choice 3 D) Choice 4

Fair value of machinery at inception of the lease: $100,000.

80) The basic accounting issue for lessors is: 80)

A) Choice 1 B) Choice 2 C) Choice 3 D) Choice 4 E) Choice 5

Rent paid in advance 5,800

B) Please see the following table:

Leased asset 5,800

C) Please see the following table:

Rent expense 5,800

D) Please see the following table: