A finance lease is defined in AASB 16/IFRS 16 as: Reading required:            Learning objective 11.3 on page 332Group of answer choicesa rental agreement of less than 12 months' duration.a lease that is not classified as an operating lease.a lease that does not transfer substantially all the risks and rewards incidental to ownership of an underlying asset.a lease that transfers substantially all the risks and rewards incidental to ownership of an underlying asset.

AASB 16/IFRS 16 defines a lease as: Reading required:            Learning objective 11.1 on page 318Group of answer choicesa contract, or part of a contract, that conveys the right to use an asset (the underlying asset) for a period of time in exchange for consideration.a contract, or part of a contract, that conveys the right to transfer a liability for a period of time in exchange for an asset.a contract that conveys the right for the lessor to obtain substantially all of the economic benefits of the identified asset.a contract, or part of a contract, that conveys the right to transfer ownership of an asset (the underlying asset) for a period of time in exchange for consideration.

A lease refers to a legal agreement between 2 parties, the lessor, who grants the right to use a specific asset for a predetermined period of time, and the lessee who gains the right to use the asset without having to purchase it outright.2 pointsTRUEFALSE

A lease where the intent is temporary use of the property by the lessee with continued ownership of the property by the lessor is calledGroup of answer choicesa purchase of property.an operating lease.a capital lease.off-balance sheet financing.

Which of the following BEST DESCRIBES the elements that should be considered when assessing whether a contract contains a lease arrangement under AASB 16 Leases?  a) The underlying asset is clearly identified, the lessee has a right to control the underlying asset and is entitled to substantially all of the underlying asset’s economic benefits Correct!  b) The underlying asset is clearly identified, the lessee has a right to control the use of underlying asset and is entitled to substantially all of the underlying asset’s economic benefits

As per IFRS16- Lease under which of the following TWO circumstances “simplified accounting” method is used:- A. To short-term leases (i.e. with terms of 12 months or less and no purchase option) and To leases for which the underlying asset, when new, is “low value”. B. To long-term leases (i.e. with terms of more than 12 months) and to leases for which the underlying asset, when new, is “high value”. C. To short-term leases (i.e. with terms of 12 months or less and no purchase option) and to leases for which the underlying asset, when old, is “low value”. D. To short-term leases (i.e. with terms of 12 months or less and no purchase option) and to leases for which the underlying asset, when new, is “high value”.