WorksheetsPre-Test: Introduction to Lease Accounting (MFRS 16)
Total questions: 10
Worksheet time: 5mins
What is the basic definition of a lease?
A temporary gift of an asset from one company to another.
A contract where a customer owns an asset and sells it to a supplier.
A contract that conveys the right to use an underlying asset for a period of time in exchange for consideration.
A bank loan used specifically to purchase a vehicle.
In a leasing arrangement, who is the "Lessor"?
The person who repairs the asset.
The user of the asset.
The bank providing a loan.
The owner of the particular asset.
According to MFRS 16, what approach must a lessee use for lease accounting?
Off-balance sheet approach.
Right-of-use approach.
Cash-basis approach.
Installment purchase approach.
A contract contains a lease only if the customer has the right to:
Use the asset without paying any consideration.
Change the legal title of the asset to their own name immediately.
Direct the use of the identified asset and obtain substantially all economic benefits from it.
Sell the asset to a third party at any time.
Which of the following is an advantage of leasing compared to a bank loan?
The lessee owns the legal title from day one.
It can provide 100% financing without a required deposit.
It increases the risk of obsolescence.
It always requires a 20% deposit.
At the commencement date, what two items must a lessee recognize on their balance sheet?
Cash and Revenue.
Right-of-use asset and Lease liability.
Only a Depreciation Expense.
Accounts Payable and Inventory.
How is the initial Lease Liability measured?
Based on the historical cost of the asset to the lessor.
At the present value of the lease payments that are not yet paid.
At the total sum of all future payments without discounting.
At the fair market value of the asset.
What is a "Bargain Purchase Option" (BPO)?
A discount given only at the start of the lease.
An option to purchase the asset at a price lower than its fair market value at a future date.
An option to return the asset early without penalty.
A requirement to pay the full market price at the end of the lease.
How does a lessee subsequently measure a Right-of-Use (ROU) asset?
Based on the current market value of the asset.
By ignoring depreciation until the lease ends.
At cost less accumulated depreciation and impairment losses.
By increasing its value every year.
What happens to the Right-of-Use (ROU) asset value if the lessee incurs initial direct costs (like legal fees)?
The ROU asset value decreases.
The ROU asset value increases.
There is no effect on the ROU asset.
It is recorded as a liability.
