IFRS 16 - LEASES
B.
Direct finance lease and Dealer/Manufacturer's lease can be distinguished by: A. The amount of the depreciation recorded each year by the lessor. B. The recognition of the manufacturer or dealer's profit at the commencement of the lease. C. The allocation of initial direct costs by the lessor to periods benefited by the lease arrangements. D. The manner in which rental receipts are recorded as rental revenue.
B.
Direct finance lease and Dealer/Manufacturer's lease can be distinguished by: A. The manner in which rental receipts are recorded as rental revenue. B. The recognition of the manufacturer or dealer's profit at the commencement of the lease. C. The amount of the depreciation recorded each year by the lessor. D. The allocation of initial direct costs by the lessor to periods benefited by the lease arrangements.
D.
Identifiable payments to cover taxes, insurance and maintenance when measuring the discounted amount of future rentals to be capitalized as part of the initial amount assigned to right-of-use asset should be A. Capitalized but at different discount rate and recorded in a different account from future rentals B. Capitalized but at different discount rate and for a relevant period that tends to be different from the future rental payments C. Included with future rentals to be capitalized D. Excluded from future rentals to be capitalized
C.
If the residual value of a underlying asset is greater than the amount guaranteed by the lessee A. The lessor pays the lessee for the difference B. The lessee recognized a gin at the end of the lease term C. The lessee has no obligation related to the residual value D. The lessee pays the lessor for the difference
C.
If the residual value of a underlying asset is greater than the amount guaranteed by the lessee A. The lessor pays the lessee for the difference B. The lessee recognizes a gain at the end of the lease term C. The lessee has no obligation related to the residual value D. The lessee pays the lessor for the difference
A.
In IFRS 16, the equal monthly rental payments made by the lessee in a short-term lease for which the lessee applies the recognition and measurement exemptions is A. Recorded as rent expense B. Recorded as reduction of lease liability C. Allocated between interest expense and depreciation expense D. Recorded partly as interest expense and partly a reduction of lease liability
C.
In a lease where there is either transfer of title at the end of the lease term or a bargain purchase option, the lessee shall capitalize the leased asset and depreciate it over A. Lease term B. The longer of the lease term and the useful life of the leased asset C. The useful life of the leased asset D. The shorter of the lease term and the useful life of the asset
C.
In a lease where there is either transfer of title at the end of the lease term or a bargain purchase option, the lessee shall capitalize the leased asset and depreciate it over A. The shorter of the lease term and the useful life of the asset B. The longer of the lease term and the useful life of the leased asset C. The useful life of the leased asset D. Lease term
A.
In case of lease of land and building, the lease payments should be split A. According to relative fair value of the two elements B. Based on the useful life of the two elements C. Using the sum of digits method D. According to method devised by the entity
D.
Lease payments under an operating lease shall be recognized as rent income by the lessor on A. Cash basis B. Diminishing balance basis C. Sum of units basis D. Straight line basis over the lease term unless another systematic basis is representative of the time pattern of the user's benefit.
A.
Net Investment in a sales type lease is equal to A. Gross investment in the lease less unearned finance income B. Cost of underlying asset C. The lease payments D. The lease payments less unguaranteed residual value
C.
One criterion for a finance lease specifies that the lease term be equal to or reater than A. The estimated life of the underlying asset B. 90% of the life of the underlying asset C. 75% of the life of the underlying asset D. 50% of the life of the underlying asset
D.
Rent collected in advance by the lessor should be treated in an operating lease as, A. Accrued asset B. Prepaid expense C. Accrued liability D. Unearned income
A.
Rent collected in advance by the lessor should be treated in an operating lease as, A. Unearned income B. Accrued liability C. Accrued asset D. Prepaid expense
C.
Rent received in advance by the lessor in an operating lease should be recognized as revenue. A. At the lease expiration B. At the lease inception C. In the period specified by the lease D. When received
D.
Short-term lease is defined as A. Six months or less B. Twelve month lease with a purchase option C. Two-year lease with option to terminate D. Twelve months or less
B.
The accounting concept that is principally applied to accounting for leases? A. Prudence B. Substance over form C. Neutrality D. Completeness
D.
The carrying amount of the right of use asset would be periodically reduced by A. Lease payment B. Portion of the lease payment allocable to the interest C. Portion of the lease payment allocable to reduction of the lease liability D. Depreciation of the right of use asset
B.
The classification of a lease on part of lessor as either operating or finance lease is based on A. The length of the lease B. The transfer of risk and rewards C. The lease payments being at least 50% of fair value D. The economic life of the underlying asset
C.
The classification of the lease is normally carried out A. At the end of the lease term B. After a "cooling off" period of one year C. At the inception of the lease D. When the entity deems it necessary
B.
The cost of right of use asset comprises all, except A. Lease payment made to lessor on or before commencement date B. Estimated cost of dismantling and restoring the underlying asset for which the lessee has no present obligation C. The present value of lease payments D. Initial direct cost incurred by lessee
C.
The excess of the fair value of the underlying asset at the inception of the lease over the carrying amount shall be recognized by the dealer lessor as A. Unearned income from a sales type lease B. Unearned income from a direct financing lease C. Manufacturer's profit from a sales type lease D. Manufacturer's profit from a direct financing lease
C.
The lease payments include all of the following, except A. Periodic rentals B. Termination penalty if the lease term reflects the termination option C. Exercise price of the purchase option that is not reasonably certain to be exercised D. Residual value guarantee of the lessee
B.
The lease payments include all of the following, except: A. Variable lease payments B. Leasehold improvement C. Residual value guarantee of the lease D. Fixed lease payments
D.
The lessee may apply the operating lease model under what condition? A. Short-lease term B. Under all circumstances C. Low value lease D. Both short-term lease and low value lease
C.
The lessor should report the underlying asset in an operating lease s which of the following A. Current asset B. Off the statement of financial position C. Reported according to nature of the asset D. Disclosed only
A.
The portion of the lease payments that is not fixed in amount but is based on a factor other than just the passage of time such as percentage of sales, amount of usage, price index and market rate of interest is called A. Contingent rent B. Variable rent C. Bargain purchase option D. Executor cost
B.
The profit on a finance lease transaction for lessors who are manufacturers or dealers would A. Not be recognized separately from finance income B. Be recognized in the normal way on the transaction C. Only be recognized at the end of the lease term D. Be recognized on a straight line over the lease term
A.
The right of use asset is reported as A. Noncurrent as separate line item B. PPE C. Intangible asset D. Investment property
B.
Under IFRS, a lessee is required to recognize A. Neither right of use asset nor lease liability B. Right of use asset and lease liability C. Right of use asset but not lease liability D. Lease liability but not right of use asset
C.
Under a direct finance lease, the excess of aggregate rentals over the cost of the underlying asset should be recognized as income of the lessor A. In increasing amounts during the term of the lease B. In constant amounts during the term of the lease C. In decreasing amounts during the term of the lease D. After the cost of the underlying asset has been fully recovered through rentals
C.
What is the cost of a right of use asset acquired in a finance lease? A. The absolute sum of the lease payments over the lease term B. The present value of the lease payments including executory costs discounted at an appropriate rate C. The present value of the lease payments exclusive of executory costs discounted at an appropriate rate D. The present value of the fair value of the asset discounted at an appropriate rate
C.
What is the cost of a right of use asset acquired in a finance lease? A. The absolute sum of the lease payments over the lease term B. The present value of the lease payments including executory costs discounted at an appropriate rate C. The present value of the lease payments exclusive of executory costs discounted at an appropriate rate D. The present value of the market value of the asset discounted at an appropriate rate
D.
What is the treatment of an unguaranteed residual value in determining the cost of goods sold under a sales type lease? A. The unguaranteed residual value is ignored B. The unguaranteed residual value is added to the cost of the underlying asset C. The unguaranteed residual value is deducted from the cost of the underlying asset at absolute amount D. The unguaranteed residual value is deducted from the cost of the underlying asset at present value
B.
What is the treatment of initial direct cost incurred by the lessee in a finance lease? A. Added to the lease liability B. Added to the carrying amount of the right of use asset C. Expensed immediately D. Added to the carrying amount of the right of use asset and lease liability
C.
What would reduce periodically the lease liability of the lessee? A. Lease payment plus the interest expense for the period B. Lease payment C. Lease payment less the portion allocable to interest D. Lease payment less depreciation expense
B.
What would reduce periodically the lease liability of the lessee? A. Lease payment plus the interest expense for the period B. Lease payment less the portion allocable to interest C. Lease payment D. Lease payment less depreciation expense
D.
When should a lessor recognize in income a no refundable lease bonus paid by a lessee on signing an operating lease? A. When received B. At the lease expiration C. At the inception of the lease D. Over the lease term
C.
Where there is a lease of land and building and the title to the land is not transferred, generally the lease is treated as if A. The land is finance lease B. The land is finance and building is operating C. The land is operating and building is finance D. The land and building are on operating lease
C.
Which is correct accounting treatment for a finance lease in the accounts of a lessor? A. Treat as a noncurrent asset equal to net investment in lease and recognize all finance payments in income statement B. Treat as receivable equal to gross amount receivable on lease and recognize finance payments in cash by reducing debt C. Treat as a receivable equal to net investment in the lease and recognize finance payments by reducing debt and taking interest to income statement D. Treat as a receivable equal to net investment in the lease and recognize finance payments in cash by reduction of debt
B.
Which of the following conditions would require lease capitalization? A. The lease does not transfer title of the underlying asset to the lessee B. The present value of the lease payments is significantly more than the fair value of the underlying asset C. There is purchase option that is not reasonably certain to be exercised D. The lease term is significantly below the useful life of the underlying asset
D.
Which statement characterizes an operating lease? A. The lessee records depreciation and interest B. The lessee records a lease obligation C. The lessor transfers title of the underlying asset to the lessee for the duration of the lease term D. The lessor records depreciation and lease revenue
D.
Which statement characterizes an operating lease? A. The lessee records the lease liability related to the underlying asset B. The lessee records depreciation and interest C. The lessor transfers title of the underlying asset to the lessee for the duration of the lease term. D. The lessor records depreciation and rent revenue
D.
Which statement concerning residual value guarantee is appropriate for the lessee? A. The asset and related liability should be increased by the absolute amount of the residual value B. The asset and related liability should be decreased by the absolute amount of the residual value C. The asset and related liability should be increased by the present amount of the residual value D. The asset and related liability should be decreased by the present amount of the residual value
D.
Which statement is correct regarding the lease capitalization criteria? A. The lease contains a purchase option B. The lease transfers ownership of the underlying asset to the lessor C. The lease payments are at least 90% of the fair value of the underlying asset D. The lease term is equal to at least 75% of the economic life of the underlying asset
A.
Which statement is true regarding initial direct costs incurred by the lessor? A. In a direct financing lease, initial direct costs are added to the net investment in the lease B. In a sales type lease, initial direct costs are expenses as component of cost of goods sold C. In an operating lease, initial direct costs incurred by the lessor are deferred and allocated over the lease term. D. All of the statements are correct
D.
Applying IFRS 16, a company sold its factory at a gain and simultaneously leased it back for 5 years. The sales price is at fair value. The factory's remaining useful life is 20 years. The company should report the gain A. As a deferred credit B. An asset valuation allowance C. In full in profit or loss D. As the amount relating only to the right transferred to the buyer-lessor
B.
A 15-year finance lease requires equal annual payments. The current portion of the lease liability at the end of year 1 is A. The reduction of the lease liability in year 1 B. The reduction of the lease liability in year 2 C. 1/15 of the original lease liability. D. The annual lease payment for year 1
B.
A lease liability is measured at A. The absolute amount of lease payments B. The present value of lease payments C. The present value of fixed lease payments D. The fair value of underlying asset
A.
A lessee had a ten-year finance lease requiring equal annual payments. The reduction of the lease liability in the second year should equal A. The current liability shown for the lease at the end of the first year B. The current liability shown for the lease at the end of the second year C. The reduction of the lease liability in the first year D. One-tenth of the original lease liability
B.
A lessee with a lease containing a purchase option that is reasonably certain to be exercised should depreciate the right of use asset over A. Useful life of the asset or the lease term, whichever is longer B. Useful life of asset C. Lease term D. Useful life of the asset or the lease term, whichever is shorter
B.
A non-refundable lease bonus paid by a lessee on signing an operating lease should be accounted for under lessor's books A. Referred when received and recognized as income in the final year of the lease term B. Recognized as rent income over the life of the lease C. Recognized as rent income when received D. Recognized as rent income during the year of commencement
C.
A right of use asset is initially measured at A. Present value of expected cash inflows B. Fair value C. Cost D. Current cost
B.
A six-year finance lease entered into on December 31 of the current year specified equal annual lease payments due on December 31 of each year. The first annual lease payment paid on December 31 of the current year consists which of the following? A. Interest B. lease liability C. Both interest expense and lease liability D. Neither interest expense and lease liability
B.
A six-year finance lease specified equal annual lease payments. The lease payment in the fifth year applicable to the reduction of the lease liability should be A. Less than the fourth year B. More than the fourth year C. The same as the sixth year D. More than sixth year
D.
All of the following situations would prima facie leas to a lease being classified as finance lease, except A. Transfer of ownership to the lessee B. Option to purchase at a value below the fair value of the underlying asset C. The lease term is for a major part of the asset's life D. The present value of the lease payments is 50% of the fair value of the asset
