IFRS for SMEs) IFRS for SMEs Leases and Service Concessions 2

Question 1

Under IFRS for SMEs, the minimum lease payments for a lessee include:

Accepted Answer

Payments over the lease term and any guaranteed residual value

Answer

Minimum lease payments comprise rentals over the lease term plus any residual value guaranteed by the lessee or a related party.

Question 2

Under IFRS for SMEs, how are contingent rents in an operating lease recognized by the lessee?

Accepted Answer

As an expense in the period in which they are incurred

Answer

Contingent rents (those that depend on a factor other than the passage of time) are recognized as expenses in the period they are incurred.

Question 3

Under IFRS for SMEs, a sale and leaseback transaction that results in a finance lease is accounted for by the seller-lessee by:

Accepted Answer

Deferring any profit on sale and amortizing it over the lease term

Answer

For a sale and leaseback resulting in a finance lease, any apparent profit on the sale is deferred and amortized over the lease term because the asset is effectively retained.

Question 4

Under IFRS for SMEs, a sale and leaseback that results in an operating lease at fair value is accounted for by:

Accepted Answer

Recognizing any gain or loss on sale immediately

Answer

If a sale and leaseback at fair value results in an operating lease, the transaction is a genuine sale and the gain or loss is recognized immediately.

Question 5

Under IFRS for SMEs, incentives received from a lessor to enter an operating lease (e.g., rent-free periods) should be:

Accepted Answer

Recognized as a reduction of lease expense over the lease term on a straight-line basis

Answer

Lease incentives reduce the total lease expense and are spread over the lease term on a straight-line basis along with the lease payments.

IFRS for SMEs (IFRS for Small and Medium-sized Entities (SMEs)) Practice Test

IFRS for SMEs (IFRS for Small and Medium-sized Entities (SMEs)) Practice Test

IFRS for SMEs) IFRS for SMEs Leases and Service Concessions 2