Question 1

A lease conveys the right to use an asset and legal ownership for the duration of the lease.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following is not a factor affecting contingent rent?

Accepted Answer

A)  passage of time
B)  amount of usage
C)  percentage of sales
D)  future price indicesE) A) and C)
F) A) and B)

Question 3

To which of the following does IAS 17 apply?

Accepted Answer

A)  investment property
B)  biological assets.
C)  specialised equipment such as refineries
D)  exploration rightsE) All of the above
F) C) and D) C

Question 4

A finance lease is a lease that transfers substantially all the risks and rewards incidental to ownership of an asset.

Accepted Answer

A) True 
 B)False

Question 5

Net investment in the lease is the gross investment in the lease discounted at the interest rate prevailing in the market at the time of commencing the lease.

Accepted Answer

A) True 
 B)False

Question 6

A machine has a useful life of 4 years and a cash value of €12,000.Company A leases the machine for €300 per month in advance and the lease is cancellable.Company B leases the machine for 8 half yearly payments in advance of €2,250.Company C leases the machine for 6 half yearly payments in advance of €1,800.Company D leases the machine for 4 half yearly payments in advance of €1,250.Which of these should be classified as a finance lease?

Accepted Answer

A)  Company A
B)  Company B
C)  Company C
D)  Company DE) None of the above
F) All of the above

Question 7

Under IAS 17 a lease is classified as a finance lease if it transfers more than 90% the risks and rewards incidental to ownership.

Accepted Answer

A) True 
 B)False

Question 8

Lessors should recognize assets held under a finance lease in their balance sheets and present them as a receivable at an amount equal to the net investment in the lease.

Accepted Answer

A) True 
 B)False  True

Question 9

The lease term is defined as;

Accepted Answer

A)  the period for which the lessee agreed.
B)  the non-cancellable term in the agreement.
C)  the non-cancellable term plus any possible extensions.
D)  the non-cancellable lease term plus any possible extensions that are reasonably likely to be taken up.E) A) and C)
F) B) and D) D

Question 10

When calculating the present value of lease payments fi the implicit rate is not available what rate should be used?

Accepted Answer

A)  LIBOR
B)  weighted average cost of capital
C)  incremental borrowing rate
D)  industry average rateE) A) and C)
F) A) and B)

Exam 16: Leases

A lease conveys the right to use an asset and legal ownership for the duration of the lease.

Correct Answer
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Which of the following is not a factor affecting contingent rent?

Correct Answer
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To which of the following does IAS 17 apply?

Correct Answer
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C

A finance lease is a lease that transfers substantially all the risks and rewards incidental to ownership of an asset.

Correct Answer
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Net investment in the lease is the gross investment in the lease discounted at the interest rate prevailing in the market at the time of commencing the lease.

Correct Answer
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Correct Answer
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Under IAS 17 a lease is classified as a finance lease if it transfers more than 90% the risks and rewards incidental to ownership.

Correct Answer
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Lessors should recognize assets held under a finance lease in their balance sheets and present them as a receivable at an amount equal to the net investment in the lease.

Correct Answer
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True

The lease term is defined as;

Correct Answer
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D

When calculating the present value of lease payments fi the implicit rate is not available what rate should be used?

Correct Answer
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Exam 16: Leases

A lease conveys the right to use an asset and legal ownership for the duration of the lease.

Correct AnswerverifiedShow Answer

Which of the following is not a factor affecting contingent rent?

Correct AnswerverifiedShow Answer

To which of the following does IAS 17 apply?

Correct AnswerverifiedC

A finance lease is a lease that transfers substantially all the risks and rewards incidental to ownership of an asset.

Correct AnswerverifiedShow Answer

Net investment in the lease is the gross investment in the lease discounted at the interest rate prevailing in the market at the time of commencing the lease.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Under IAS 17 a lease is classified as a finance lease if it transfers more than 90% the risks and rewards incidental to ownership.

Correct AnswerverifiedShow Answer

Lessors should recognize assets held under a finance lease in their balance sheets and present them as a receivable at an amount equal to the net investment in the lease.

Correct AnswerverifiedTrue

The lease term is defined as;

Correct AnswerverifiedD

When calculating the present value of lease payments fi the implicit rate is not available what rate should be used?

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
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Correct Answer
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C

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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True

Correct Answer
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D

Correct Answer
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