Western Governors University (WGU) ACCT3650 D105 Intermediate Accounting III Practice Exam

To determine the book value of the leased asset for Silver Point Co. as of December 31, 2021, it's essential to understand how leases are recorded on the balance sheet. For operating leases under the new accounting standards (ASC 842), the lessee records a right-of-use (ROU) asset and a lease liability on the balance sheet.

The book value of the leased asset would typically be calculated based on the initial cost of the asset recorded (which could be the present value of the lease payments) minus any accumulated amortization related to the asset. In this case, if the initial value of the asset was properly recognized at either its fair value or the present value of future lease payments, and if there was a systematic method of amortization being applied over the lease term, one would subtract the accumulated amount from the initial value.

For the correct answer—$468,000—it is likely that this amount reflects the present value of future lease payments minus an appropriate amount of accumulated amortization that has been recognized from the lease's inception to the reporting date. This means that the approach taken was in accordance with the accounting standards for leases where the ROU asset is capitalized and amortized, effectively calculating the diminishing book value of