Which of the following is not one of the lease classification tests? Purchase option Lease term Transfer of ownership Collectibility
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33.
Which of the following is not one of the lease classification tests?
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- Describe the effect of a “bargain-purchase option” onaccounting for a capital lease transaction by a lessee.Which 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?Compare the way a purchase option that is reasonably certain to be exercised and a lessee-guaranteed residual value are treated by the lessee and lessor when determining lease payments.
- Which of the following statements about purchase option is correct? The lessee includes its present value on the computation of lease liability only if it is guaranteed. None of the other choices is correct. It is ignored if the leased asset reverts back to the lessor at the end of the useful life. Its present value is added to get the lease liability if it is reasonably certain that it will be exercised.Either P.V of Unguaranteed Residual Value is considered in calculatio of Fair Value of Lease or not as per AASB 16?Which of the following statements about purchase option is correct? a. None of the other choices is correct. b. Its present value is added to get the lease liability if it is reasonably certain that it will be exercised. c. it is ignored if the leased asset reverts back to the lessor at the end of the useful life. d. The lessee includes its present value on the computation of lease liability only if it is guaranteed.
- Differentiate between an operating lease, acapital (or financial) lease, and a sale andleaseback arrangement. How would the pastaccounting treatment of leases mislead investorsand what rules have been put in place to mitigatethis problem?Discuss the effectiveness of SFAS No. 13 in addressing the lease capitalizationproblem.we have to mention lease liabilites
- Which of the following is not a criterion for a lease to be recorded as a finance lease?(a) There is transfer of ownership.(b) The lease is cancelable.(c) The lease term is for the major part of the economic life of the asset.(d) There is a bargain-purchase option.What are the criteria for classifying a lease as operating or capital? Why is there a difference between the two? What are the implications of an operating lease versus a capital lease on an entity’s financial statements?Why are compound interest concepts appropriate and applicable in accounting for a sales-type lease?
