Lessee Accounting

Under IFRS, a lessee is required to recognize

• Right of use asset and lease liability

• Right of use asset but not lease liability

• Lease liability but not right of use asset

• Neither right of use asset nor lease liability

The lessee may apply the operating lease model under what condition?

• Short-term lease

• Low value lease

• Both short-term lease and low value lease

• under all circumstances

A short-term lease is defined as

• Twelve months or less

• Six months or less

• Twelve-month lease With a purchase option

• Two-year lease With option to terminate

Which statement is true about low value lease?

• The value of an underlying asset is based on the value of the asset when new regardless of the age of the asset.

• The term of a low value lease may be more than twelve months.

• An underlying asset does not qualify as low value lease if the nature of the asset is such that the asset is typically not of low value when new.

• All of these statements are true about low value lease.

A right of use asset is initially measured at

(a)  

• Cost
• Fair value
• Current cost
• Current cost

The cost of right of use asset comprises all, except

• The cost of right of use asset comprises all, except

• Initial direct cost incurred by lessee

• Lease payment made to lessor on or before commencement date

• Estimated cost of dismantling and restoring the underlying asset for which the lessee has no present obligation

The right of use asset is reported as

• Noncurrent as separate line stem

• Property, plant and equipment

• Intangible asset

• Investment property

A lessee with a lease containing a purchase option that is reasonably certain to be exercised should depreciate the right of use asset over

• Useful life of the asset

• Lease term

• Useful life of the asset or the lease term, whichever is shorter

• Useful life of the asset or the lease term, whichever is longer

A lease liability is measured at

• The absolute amount of lease payments

• The present value of lease payments

• The present value of fixed lease payments

• The fair value of the underlying asset

The lease payments include all of the following, except

• Fixed lease payments

• Variable lease payments

• Leasehold improvement

• Residual value guarantee of the lessee