IFRS for SMEs) IFRS for SMEs Leases and Service Concessions 1

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

IFRS for SMEs defines a finance lease as a lease that transfers substantially all risks and rewards of ownership to the lessee, regardless of legal title.

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

At commencement, the lessee recognizes an asset and a corresponding lease liability at the lower of the fair value of the leased asset and the present value of minimum lease payments.

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

Under IFRS for SMEs, operating lease payments are recognized as an expense in profit or loss on a straight-line basis over the lease term.

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

A lease term covering the major part of an asset's economic life is one of the indicators that a lease is a finance lease under IFRS for SMEs.

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

Under IFRS for SMEs, a lessor classifies each lease as either a finance lease or an operating lease based on the same risks-and-rewards principle as for lessees.

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 1