Right-of-Use Asset Quiz

How is the cost of a right-of-use asset initially measured at the commencement date of a lease?

• At its fair value on the commencement date.

• At the present value of future lease payments only.

• It comprises the initial measurement of the lease liability, any payments made at or before the start date (less incentives), and any initial direct costs

• At the total of all lease payments over the lease term.

A company, Lezz Legacy Bhd, leases equipment for 3 years with annual payments of RM 3,000 at the end of each year. The implicit interest rate is 10%. What is the right-of-use asset (ROU) at the beginning of the lease?

• RM 9,000

• RM 7,461

• RM 2,487

• RM 746

How should a right-of-use asset be depreciated if a company uses the straight-line method?

• The asset's cost is divided by its economic life.

• The asset's cost is divided by the lease term.

• The asset's cost minus any residual value is divided by the shorter of the useful life or lease term.

• The asset is not depreciated, as it's a leased asset.

For a lease with payments in arrears, what is the first balance (b/d) in the schedule of lease payments based on?

• The fair value of the asset.

• The total of all annual payments.

• The right-of-use asset amount

• The lease payment for the first year.

When a lessee makes an annual payment on a lease, which accounts are debited and credited?

• Debit Lease Liability and Credit Cash/Bank.

• Debit Right of Use Asset and Credit Lease Liability.

• Debit Depreciation Expenses and Credit Accumulated Depreciation.

• Debit Interest Expense and Credit Lease Liability.

What is the impact of initial costs, such as dismantling costs or legal fees, on the Right of Use (ROU) asset?

• They decrease the ROU asset's value.

• They do not affect the ROU asset or the lease liability.

• They increase the ROU asset's value.

• They are expensed immediately and don't affect the ROU asset.