IFRS for SMEs) IFRS for SMEs Leases and Service Concessions

Question 1

Under IFRS for SMEs, a finance lease is one that:

Accepted Answer

Transfers substantially all the risks and rewards incidental to ownership of the leased asset to the lessee

Answer

Has a lease term of more than one year

Answer

Has a lease term equal to or greater than 75% of the asset's useful life

Answer

Includes a purchase option at fair value

Question 2

Under IFRS for SMEs, at the commencement of a finance lease, the lessee recognizes:

Accepted Answer

An asset and a liability at the lower of the fair value of the leased asset and the present value of minimum lease payments

Answer

Only lease expense over the lease term

Answer

A right-of-use asset at the present value of all lease payments

Answer

Only a contingent liability for future rentals

Question 3

Under IFRS for SMEs, how does a lessee account for an operating lease?

Accepted Answer

Lease payments are recognized as an expense on a straight-line basis over the lease term

Answer

An asset and liability are recognized at inception

Answer

Only a disclosure note is required

Answer

Lease payments are capitalized and depreciated

Question 4

Which of the following is an indicator of a finance lease under IFRS for SMEs?

Accepted Answer

The lease term is for the major part of the economic life of the asset

Answer

The lessor retains all risks of ownership

Answer

Lease payments increase annually with inflation only

Answer

The asset is returned in the same condition as provided

Question 5

Under IFRS for SMEs, how does a lessor classify leases?

Accepted Answer

As either finance leases or operating leases based on whether substantially all risks and rewards are transferred

Answer

All leases are operating leases for the lessor

Answer

Based on the lessor's business model

Answer

As direct financing or sales-type leases

Question 6

Under IFRS for SMEs, a lessor with a finance lease recognizes the lease as:

Accepted Answer

A receivable at an amount equal to the net investment in the lease

Answer

An asset on the balance sheet at cost

Answer

An off-balance-sheet arrangement

Answer

Revenue immediately at the commencement date