IAS17 (Leases) Flashcards
1
Q
What is a finance lease?
A
A contract to hire out an asset between the lessor and the lessee. All risks and rewards transfered to the lessee.
2
Q
What are the indicators of a finance lease?
A
+ Transfer of legal ownership at end of lease.
+ Purchase asset at lerrss than fair value at end of lease.
+ Lease term for substantially most of the useful economic life.
+ Start of the lease present value is substantially all of the fair value of the asset.
+ Lessee will compensate the lessor iof lease is cancelled.
3
Q
How is a finance lease accounted for?
A
Dr Finance Lease Asset (SOFP)
Cr Finance Lease Liability (SOFP)
Dr Depreciation (SPL) Cr Accumulated Depreciation (SOFP)
Dr Finance Costs (SPL)
Cr Finance Lease Liability (SOFP)
Dr Finance Lease Liability (SOFP) Cr Bank (SPL)
