Ch 21 IFRS Insights

Question 0

Both GAAP and IFRS share the same objective of recording leases by lessees and lessors according to…

Answer 0

Their economic substance (according to definitions of

Their assets and liabilities)

Question 1

Lessees and lessors enter into arrangements with one

Another without regard to…

Answer 1

National boundaries

Question 2

IFRS VS GAAP: risks and rewards of ownership

Answer 2

Both determine if they have been transferred in lease
Under their lease capitalization criteria

IFRS more general in its transfer provisions

Question 3

IFRS vs GAAP: lease terminology

Answer 3

Both use same terminology

Question 4

IFRS VS GAAP: capital leases

Answer 4

IFRS refers to them as finance leases

GAAP refers to them as capital leases

Question 5

IFRS VS GAAP: lessor criteria

Answer 5

GAAP has additional lessor criteria

GAAP: Payments are collectible and there are no additional
costs Associated with a lease

Question 6

IFRS VS GAAP: implicit rate and incremental rate

Answer 6

IFRS requires use of implicit rate to record lease unless
Impractical to determine lessor’s implicit rate

GAAP requires use of incremental rate unless implicit
Rate known by lessee and lower than incremental rate

Question 7

IFRS VS GAAP: extensive disclosure of future noncancelable lease payments

Answer 7

Required by GAAP for each of next 5 years and years thereafter

IFRS does not require it

Question 8

GAAP VS. IFRS: standard for leases

Answer 8

GAAP standard for leases has 30 interpretations, IFRS
has 3 interpretations

GAAP’s include lease agreements for natural resources,
Sale leasebacks, real estate leases and leveraged leases
(not included in IFRS)