CAF-6 · Chapter 3 · Question 7 of 15
A lessor classifies a lease as a finance lease if:
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) It transfers substantially all risks and rewards incidental to ownership.
Explanation
A lease is classified as a finance lease if it transfers substantially all the risks and rewards incidental to ownership of an underlying asset. Otherwise, it is an operating lease.
More IFRS 16 Leases MCQs
- Q9Where should a lessee present the interest expense on a lease liability in the Statement of Comprehensive Income?
- Q10In the Statement of Cash Flows, a lessee should classify the principal portion of lease payments as:
- Q11An entity leases an office printer with a new value of Rs. 40,000. The lease is for 3 years. This asset would likely be classified as a:
- Q12At the end of a 4-year lease, a company pays a penalty of Rs. 50,000 because it chose to terminate the lease early as allowed in the…
- Q13What is 'Net investment in the lease' from a lessor's perspective?