Deck #13 (F6)

Question 1

what are the two criteria for lease?

Answer 1

1. identifiable asset

2. contract must convey right to control by the lessee

Question 2

what must be decided once it is determined the contract has a lease? (3)

Answer 2

1. assess whether multiple contracts should be combined
2. identify separate lease components
3. determine if lease and non lease components should be separated

Question 3

contracts should be combined if they meet ALL of the following criteria (4)?

Answer 3

1. one or more contracts contain a lease
   2 contracts are entered into at approx the same time
2. parties to the contract are approx the same
3. either (a) performance of one of the contracts affects another (b) contracts have same commercial objectives (c), or the use of underlying assets don’t count as separate lease components

Question 4

Lessee perspective: what are the two steps to accounting for separate lease components?

Answer 4

1. identify each right of use asset

2. determine whether lease and non lease component are separated or combined