FAR2_Leases (part 1)

At the commencement date, a lessee shall recognise:

• Dr. Right of use asset

  Cr. Lease liability

• Dr. Lease receivable

  Cr. Asset

• Dr. Lease liability

  Cr. Right of use asset

A lessee may elect not to apply the right-of use approach to:

• temporary leases

• short-term leases

• lease of property with low value

For subsequent measurement, a lessee shall measure the right-of-use asset applying a cost model.

• True

• False

Bargain-renewal option:

• the option for lessee to renew the lease

• The non-cancelable period of leases

• can extend the lease term

Journal entry on the reporting date in the book of lessee:

• Dr. Lease liability xx

  Dr. Interest expense xx

  Cr. Cash xx

• Dr. Cash xx

  Cr. Lease receivable xx

• Dr. Depreciation expense xx

  Cr. Acc. depreciation xx

A lessor shall classify each of its leases as either an operating lease or a finance lease:

• True

• False

A lease is a finance lease if it has any of the following terms:

• Ownership transfers at the end of the lease

• Contain Purchase Option

• Lease term is for majority of economic life

• Leased asset(s) specialised

A lease is an operating lease if it does not have the following terms:

• Ownership transfers at the end of the lease

• Contain Purchase Option

• Lease term is for majority of economic life

• Leased asset(s) specialised