customer can direct the use of the asset. The asset is explicitly or implicitly identified in the contract. The asset is physically distinct or the customer has rights to substantially all of the asset’s capacity. The supplier does not have a substantive substitution right
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For a transaction to be a lease under ASC 842 it must contain an “identified asset”. Which of the following is not a condition for an asset to qualify as an “identified asset”?
- The customer can direct the use of the asset.
- The asset is explicitly or implicitly identified in the contract.
- The asset is physically distinct or the customer has rights to substantially all of the asset’s capacity.
- The supplier does not have a substantive substitution right.
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- When the asset is explicitly identified in the contract, it means that: a. the identified asset is never mentioned in the contract b. there is no identified asset for lease c. the identified asset is clearly written in the contract d. the identified asset is not written in the contracWhich of the following is not included in the evaluation questions of IFRS 16 in identifying a lease contract? a. Does the lessee have the right to obtain all of the economic benefits from the use of the asset? b. Does the lessee direct the use of the identified asset throughout the period of use? c. Does the lessor have a substitution right over the asset? d. Is there an identified asset?Which of the following statements are false under a sale a leaseback transaction? I. If a sale and leaseback transactions results in a finance lease, any excess of proceeds over the carrying amount shall not be immediately recognized as income by a seller-lessee. Instead, it shall be deferred and amortized over the lease term. II. If the sale price is established at fair value under an operating lease, any gain or loss shall be deferred and amortized over the period which the asset is expected to be used. I only II ONLY BOTH I AND II NEITHER I OR II
- When a sale-leaseback transaction occurs, if the leaseback is considered to be an operating lease, and the lease payments and sales price are at fair value, any gain on the sale a. Is amortized over the lease term by a company using IFRS. b. Is recognized immediately by a company using IFRS. c. Is amortized over the lease term by a company using either U.S. GAAP or IFRS. d. Is not recorded by a company using IFRS.One of the following statements is false: a. If the underlying asset will not revert to the lessor, the residual value is simply ignored by the lessor in the computation of unearned interest income and gross profit on the sale. b. The underlying asset will remain with the lessee if the lease provides for either a purchase option that is reasonably to be exercised or transfer of title to the lessee upon the lease expiration. c. When a lessor actually sells an asset that it has been leasing, the difference between the sales price and the carrying amount of the lease receivable is recognized in profit or loss. d. The gain or loss that pertains to the right retained by the seller-lessee in a sales and leaseback transaction is not recognized.If the fair value of the consideration for the sale of an asset does not equal the fair value of the asset, or if the payments for the lease are not at market rates, an entity shall make the following adjustments to measure the sale proceeds at fair value? any below-market terms shall be accounted for as a prepayment of lease payments both of the other choices either of the other choices any above-market terms shall be accounted for as additional financing provided by the buyer-lessor to the seller-lessee
- All of the following are differences with respect to the accounting for leases, under IFRS and GAAP, except: IFRS has an additional lessee recognition and measurement exemption for leases of assets of low value (GAAP does not). IFRS allows alternative measurement bases for the right-of-use asset (e.g., the revaluation model). under IFRS, lessees use the same tests to determine if a lease should be classified as finance or operating. IFRS permits recognition of selling profit on direct financing leases at lease commencement.Occasionally, a lease agreement includes a guarantee by the lessee that the lessor will recover a specified residual value when custody of the asset reverts back to the lessor at the end of the lease term. Under what circumstance can the guaranteed residual value influence the amounts recorded by the lessee and lessor? In that circumstance, how are the amounts affected?What is a substitution right, and when does that right result in a contract not being a lease?
- What is the basic difference between the accounting procedures used by a lessor for a sales-type lease and those used for a direct-financing lease?Asnwer true or false In a sale and leaseback transaction that qualifies as a sale under PFRS 16, the seller-lessee recognized only the amount of any gain or loss that relates to the rights transferred to the buyer-lessor The lessor uses the implicit interest rate in determining the present value of the lease payments When rental payments vary over the term of the operating lease, the lessor should recognize lease income on a straight-line basis, unless there is another method that is more appropriate Under an operating lease, the lease bonus paid by the lessee to the lessor and amortized over the lease term as a reduction to lease income.Generally accepted accounting principles require that certain leaseagreements be accounted for as purchases. The theoretical basis for thistreatment is that a lease of this type A. Effectively conveys all of the benefits and risks incident to the ownership of property B. Is an example of form over substance C. Provides the use of the leased asset to the lessee for a limited period of time D. Must be recorded in accordance with the concept of cause and effect
