Question 1

Lease rentals representing a recovery of material executory costs are to be treated by the lessor as:

Accepted Answer

A) expenses of the financial years in which the related costs incurred. 
B) expenses at inception when the related costs incurred. 
C) revenue of the financial years in which the related costs incurred. 
D) revenue at inception when the related costs incurred. 
A) expenses of the financial years in which the related costs incurred. 
B) expenses at inception when the related costs incurred. 
C) revenue of the financial years in which the related costs incurred. 
D) revenue at inception when the related costs incurred.

Question 2

In the case of a finance lease,the accounting treatment by the lessee could:

Accepted Answer

A) calculate the IRR implicit in the lease contract and disclose it in the notes to the accounts. 
B) provide note disclosure to the accounts and recognise the lease payments in the same way as a rental expense. 
C) accrue the lease payments and match them against revenues earned by using a unit of production method. 
D) recognise an asset and associated liability equal in value to the present value of the minimum lease payments. 
A) calculate the IRR implicit in the lease contract and disclose it in the notes to the accounts. 
B) provide note disclosure to the accounts and recognise the lease payments in the same way as a rental expense. 
C) accrue the lease payments and match them against revenues earned by using a unit of production method. 
D) recognise an asset and associated liability equal in value to the present value of the minimum lease payments.

Question 3

Explain the benefits of a sale and leaseback transaction.

Accepted Answer

A sale and leaseback transaction occurs

Question 4

The term 'bargain purchase option' is not used explicitly in IAS 17 but is described as:

Accepted Answer

A) the option to purchase the leased asset for significantly less than its cost at the date the option becomes exercisable, for it to be reasonably certain at the inception of the lease, that the option will be exercised. 
B) the option to purchase the asset at a price that is expected to be sufficiently lower that the fair value at the date the option becomes exercisable, for it to be reasonably certain at the inception of the lease, that the option will be exercised. 
C) being in place when the lessee is guaranteed to undertake the option at the end of the lease. 
D) the option to purchase the asset at a price that is expected to be sufficiently lower that the fair value at the date the option becomes exercisable, for it to be reasonably certain at the inception of the lease, that the option will be exercised and being in place when the lessee is guaranteed to undertake the option at the end of the lease. 
A) the option to purchase the leased asset for significantly less than its cost at the date the option becomes exercisable, for it to be reasonably certain at the inception of the lease, that the option will be exercised. 
B) the option to purchase the asset at a price that is expected to be sufficiently lower that the fair value at the date the option becomes exercisable, for it to be reasonably certain at the inception of the lease, that the option will be exercised. 
C) being in place when the lessee is guaranteed to undertake the option at the end of the lease. 
D) the option to purchase the asset at a price that is expected to be sufficiently lower that the fair value at the date the option becomes exercisable, for it to be reasonably certain at the inception of the lease, that the option will be exercised and being in place when the lessee is guaranteed to undertake the option at the end of the lease.

Question 5

For a depreciable asset,the amount of depreciation recognised shall be in accordance with IAS 16.The asset shall be:

Accepted Answer

A) fully depreciated over the shorter of the lease term and its useful life, if there is a reasonable certainty that the lessee will obtain ownership by the end of the lease term. 
B) fully depreciated over the shorter of the lease term and its useful life, if there is no reasonable certainty that the lessee will obtain ownership by the end of the lease term. 
C) fully depreciated over the longer of the lease term and its useful life, if there is no reasonable certainty that the lessee will obtain ownership by the end of the lease term. 
D) fully depreciated over the longer of the lease term and its useful life, if there is no reasonable certainty that the lessee will obtain ownership by the end of the lease term 
A) fully depreciated over the shorter of the lease term and its useful life, if there is a reasonable certainty that the lessee will obtain ownership by the end of the lease term. 
B) fully depreciated over the shorter of the lease term and its useful life, if there is no reasonable certainty that the lessee will obtain ownership by the end of the lease term. 
C) fully depreciated over the longer of the lease term and its useful life, if there is no reasonable certainty that the lessee will obtain ownership by the end of the lease term. 
D) fully depreciated over the longer of the lease term and its useful life, if there is no reasonable certainty that the lessee will obtain ownership by the end of the lease term

Question 6

Joplin Ltd entered into a lease agreement on 1 July 2013 with Thomas Ltd.The terms of the lease are as follows: $$\begin{array} { | l | r | l | } 
\hline \text { Duration of lease } & 10 \text { years } & \
\hline \text { Useful life of leased asset } & 13 \text { years } & \
\hline \text { Unguaranteed residual } & \$ 2,000 & \
\hline \text { Lease payment } & \$ 1,000 & \text { at inception } \
\hline \text { Lease payments (in arrears) } & \$ 2,500 & \begin{array} { l } 
\text { per year (10 payments) } \
\text { due } 30 \text { June }
\end{array} \
\hline
\end{array}$$ The interest rate implicit in the lease is 6% and the fair value of the leased asset at the inception of the lease is $20517.The lease is non-cancellable and at the end of the lease the asset is returned to the lessor.The economic benefits provided by the lease asset are expected to be consumed evenly over its life.What is the value of the lease asset and lease liability in the books of the lessee after adjusting entries made on 30 June 2014?

Accepted Answer

A) lease asset: $17908; lease liability: $18064 
B) lease asset: $21352; lease liability: $21954 
C) lease asset: $18465; lease liability: $18188 
D) lease asset: $17460; lease liability: $17004 
A) lease asset: $17908; lease liability: $18064 
B) lease asset: $21352; lease liability: $21954 
C) lease asset: $18465; lease liability: $18188 
D) lease asset: $17460; lease liability: $17004

Question 7

Mitchum Ltd entered into a lease agreement on 1 July 2013 to lease equipment on the following terms: $$\begin{array} { | l | r | l | } 
\hline \text { Duration of lease } & 4 \text { years } & \
\hline \text { Useful life of leased asset } & 8 \text { years } & \
\hline \text { Guaranteed residual } & \$ 1,500 & \
\hline \text { Lease payments (in arrears) } & \$ 3,500 & \begin{array} { l } 
\text { per year (4 payments) } \
\text { due 30 June }
\end{array} \
\hline
\end{array}$$ The interest rate implicit in the lease is 6% and the fair value of the leased asset is $13 316.The lease is cancellable at the option of the lessee.The economic benefits provided by the leased asset are expected to be consumed evenly over its life.What are the appropriate entries in the books of the lessee at the end of the reporting period 30 June 2014?

Accepted Answer

A)  $$\begin{array} { | c | l | r | r | } 
\hline \mathrm { Dr } & \text { Interest expense } & 799 & \
\hline \mathrm { Dr } & \text { Lease liability } & 2701 & \
\hline \mathrm { Cr } & \text { Cash } & & 3500 \
\hline & & & \
\hline \mathrm { Dr } & \text { Lease amortisation expense } & 1332 & \
\hline \mathrm { Cr } & \text { Accumulated amortisation } & & 1332 \
\hline
\end{array}$$ 
B)  $$\begin{array} { | c | l | r | r | } 
\hline \mathrm { Dr } & \text { Interest expense } & 728 & \
\hline \mathrm { Dr } & \text { Lease liability } & 2772 & \
\hline \mathrm { Cr } & \text { Cash } & & 3500 \
\hline & & & \
\hline \mathrm { Dr } & \text { Lease amortisation expense } & 1213 & \
\hline \mathrm { Cr } & \text { Accumulated amortisation } & & 1213 \
\hline
\end{array}$$ 
C)  $$\begin{array} { | l | l | r | r | } 
\hline \mathrm { Dr } & \text { Rental expense-equipment } & 3500 & \
\hline \mathrm { Cr } & \text { Cash } & & 3500 \
\hline
\end{array}$$ 
D)  $$\begin{array} { | c | l | r | r | } 
\hline \mathrm { Dr } & \text { Rental expense-equipment } & 3500 & \
\hline \mathrm { Cr } & \text { Cash } & & 3500 \
\hline & & & \
\hline \mathrm { Dr } & \text { Lease amortisation expense } & 3329 & \
\hline \mathrm { Cr } & \text { Accumulated amortisation } & & 3329 \
\hline
\end{array}$$ 
A)  $$\begin{array} { | c | l | r | r | } 
\hline \mathrm { Dr } & \text { Interest expense } & 799 & \
\hline \mathrm { Dr } & \text { Lease liability } & 2701 & \
\hline \mathrm { Cr } & \text { Cash } & & 3500 \
\hline & & & \
\hline \mathrm { Dr } & \text { Lease amortisation expense } & 1332 & \
\hline \mathrm { Cr } & \text { Accumulated amortisation } & & 1332 \
\hline
\end{array}$$ 
B)  $$\begin{array} { | c | l | r | r | } 
\hline \mathrm { Dr } & \text { Interest expense } & 728 & \
\hline \mathrm { Dr } & \text { Lease liability } & 2772 & \
\hline \mathrm { Cr } & \text { Cash } & & 3500 \
\hline & & & \
\hline \mathrm { Dr } & \text { Lease amortisation expense } & 1213 & \
\hline \mathrm { Cr } & \text { Accumulated amortisation } & & 1213 \
\hline
\end{array}$$ 
C)  $$\begin{array} { | l | l | r | r | } 
\hline \mathrm { Dr } & \text { Rental expense-equipment } & 3500 & \
\hline \mathrm { Cr } & \text { Cash } & & 3500 \
\hline
\end{array}$$ 
D)  $$\begin{array} { | c | l | r | r | } 
\hline \mathrm { Dr } & \text { Rental expense-equipment } & 3500 & \
\hline \mathrm { Cr } & \text { Cash } & & 3500 \
\hline & & & \
\hline \mathrm { Dr } & \text { Lease amortisation expense } & 3329 & \
\hline \mathrm { Cr } & \text { Accumulated amortisation } & & 3329 \
\hline
\end{array}$$

Question 8

The following is an extract from a lease payment schedule for Lipton Pty Plc.What is the present value of the lease liability at 30 June 2012? $\begin{array}{|r|l|l|c|}
\hline {\text { Date }} & \begin{array}{l}
\text { Lease } \
\text { payment }
\end{array} & \begin{array}{l}
\text { Interest } \
\text { expense }
\end{array} & \begin{array}{l}
\text { Present value of } \
\text { lease liability }
\end{array} \
\hline \text { 1-Jul-11 } & & & 17039 \
\hline 30 \text {-Jun-12 } & 3500 & 1704 & ? \
\hline
\end{array}$

Accepted Answer

A) €13 539 
B) €15 335 
C) €15 243 
D) €11 835 
A) €13 539 
B) €15 335 
C) €15 243 
D) €11 835

Question 9

From the perspective of the lessor,finance leases can be further classified into:

Accepted Answer

A) leases involving agricultural products and direct-finance leases. 
B) leases involving manufacturers or dealers and sales and leasebacks. 
C) leases involving manufacturers or dealers and direct-finance leases. 
D) leases involving land and buildings and direct-finance leases 
A) leases involving agricultural products and direct-finance leases. 
B) leases involving manufacturers or dealers and sales and leasebacks. 
C) leases involving manufacturers or dealers and direct-finance leases. 
D) leases involving land and buildings and direct-finance leases

Question 10

The following is an extract from a lease payment schedule for Lessee Pty Limited.What is the present value of the lease liability at 30 June 2012? $$\begin{array} { | c | c | c | c | } 
\hline \text { Date } & \begin{array} { c } 
\text { Lease } \
\text { payment }
\end{array} & \begin{array} { c } 
\text { Interest } \
\text { expense }
\end{array} & \begin{array} { c } 
\text { Present value of } \
\text { lease liability }
\end{array} \
\hline 01 \text { July } 2011 & & & 21506 \
\hline \text { 30 June 2012 } & 3500 & 2,151 & ? \
\hline
\end{array}$$

Accepted Answer

A) €18 006 
B) €19 355 
C) €25 006 
D) €20 157 
A) €18 006 
B) €19 355 
C) €25 006 
D) €20 157

Question 11

At inception of the lease,what is the cost basis of an asset acquired from a lease arrangement when the lease is classified as a finance lease?

Accepted Answer

A) The net realisable value of the asset plus present value of the minimum lease payments. 
B) The fair value of the leased asset. 
C) The lower of fair value of the leased asset or present value of the minimum lease payments. 
D) The lower of fair value of the leased asset or present value of the minimum lease payments plus any initial indirect costs. 
A) The net realisable value of the asset plus present value of the minimum lease payments. 
B) The fair value of the leased asset. 
C) The lower of fair value of the leased asset or present value of the minimum lease payments. 
D) The lower of fair value of the leased asset or present value of the minimum lease payments plus any initial indirect costs.

Question 12

An owner of an asset may sell it and then lease it back from the new owner.Where this lease meets the conditions to be classified as a finance lease,the profit or loss on the sale of the asset recorded by the lessee should be classified as a finance item in the statement of comprehensive income in the year of the sale.

Accepted Answer

A) True 
 B)False

Question 13

Discuss the presentation and disclosure requirements of operating leases under IAS 17.

Accepted Answer

Where a lease is classified by the lesso

Question 14

A non-cancellable lease is a lease that is cancellable only:

Accepted Answer

A) upon the occurrence of some probable contingency. 
B) with the permission of the lessee. 
C) if the lessee enters into a new lease for the same or equivalent asset with the same lessor. 
D) upon payment by the lessor of such an additional amount that, at inception of the lease, continuation of the lease is certain. 
A) upon the occurrence of some probable contingency. 
B) with the permission of the lessee. 
C) if the lessee enters into a new lease for the same or equivalent asset with the same lessor. 
D) upon payment by the lessor of such an additional amount that, at inception of the lease, continuation of the lease is certain.

Question 15

Gerbert Plc enters into a finance lease with Hokiman Plc on 1 July 2012 for an item of machinery that has a fair value at that date of €226 718.The lease is for a period of 4 years,with annual lease payments of €62 000 due on 30 June each year,the first payment to be made in 2013.There is a bargain purchase option of €15 000 available for Hokiman to exercise at the end of the lease period.The rate of interest implicit in the lease is 6%.It cost Gerbert Plc €190 000 to manufacture the machine.What are the entries in the books of Gerbert Plc for 1 July 2012 and 30 June 2013 (round amounts to the nearest euro)?

Accepted Answer

A)  $$\begin{array}{l}
01 \text { July } 2012\
\begin{array} { | c | l | c | c | } 
\hline \mathrm { Dr } & \text { Lease receivable } & 226718 & \
\hline \mathrm { Cr } & \text { Machine } & & 226718 \
\hline & & \
\hline{  \text {June } 30,2013 } & & \
\hline \mathrm { Dr } & \text { Cash } & 62000 & \
\hline \mathrm { Cr } & \text { Interest revenue } & & 13603 \
\hline \mathrm { Cr } & \text { Lease receivable } & & 48397 \
\hline
\end{array}
\end{array}$$ 
B)  $01 \text { July } 2012$
$\begin{array}{|l|l|l|l|}
\hline \mathrm{Dr} & \text { Lease receivable } & 226718 & \
\hline \mathrm{Dr} & \text { Cost of sales } & 190000 & \
\hline \mathrm{Cr} & \text { Inventory } & & 190000 \
\hline \mathrm{Cr} & \text { Sales } & & 226718 \
\hline
\end{array}$

$30 \text { June } 2013$
$\begin{array}{|c|l|c|c|}
\hline\mathrm{Dr} & \text { Cash } & 62000 & \
\hline \mathrm{Cr} & \text { Interest revenue } & & 13603 \
\hline \mathrm{Cr} & \text { Lease receivable } & & 48397\
\hline
\end{array}$ 
C)  01 July 2012
$\begin{array}{|c|l|c|c|}
\hline \mathrm{Dr} & \text { Lease receivable } & 226718 & \
\hline \mathrm{Cr} & \text { Machine } & & 190000 \
\hline \mathrm{Cr} & \text { Deferred gain } & & 36718 \
\hline
\end{array}$

$30 \text { June } 2013$ 
$\begin{array}{|l|l|r|r|}
\hline \mathrm{Dr} & \text { Cash } & 62000 & \
\hline \mathrm{Dr} & \text { Deferred gain } & 9180 & \
\hline \mathrm{Cr} & \text { Interest revenue } & & 13603 \
\hline \mathrm{Cr} & \text { Lease receivable } & & 57577 \
\hline
\end{array}$ 
D)  01 July 2012
$\begin{array}{|l|l|r|r|}
\hline \mathrm{Dr} & \text { Lease receivable } & 263000 & \
\hline \mathrm{Cr} & \text { Unearned interest } & & 36282 \
\hline \mathrm{Cr} & \text { Machine } & & 226718 \
\hline
\end{array}$

$30 \text { June } 2013$
$\begin{array}{|r|l|r|r|}
\hline \mathrm{Dr} & \text { Cash } & 62000 & \
\hline \mathrm{Cr} & \text { Unearned interest } & & 9071 \
\hline \mathrm{Cr} & \text { Lease receivable } & & 52929 \
\hline
\end{array}$ 
A)  $$\begin{array}{l}
01 \text { July } 2012\
\begin{array} { | c | l | c | c | } 
\hline \mathrm { Dr } & \text { Lease receivable } & 226718 & \
\hline \mathrm { Cr } & \text { Machine } & & 226718 \
\hline & & \
\hline{  \text {June } 30,2013 } & & \
\hline \mathrm { Dr } & \text { Cash } & 62000 & \
\hline \mathrm { Cr } & \text { Interest revenue } & & 13603 \
\hline \mathrm { Cr } & \text { Lease receivable } & & 48397 \
\hline
\end{array}
\end{array}$$ 
B)  $01 \text { July } 2012$
$\begin{array}{|l|l|l|l|}
\hline \mathrm{Dr} & \text { Lease receivable } & 226718 & \
\hline \mathrm{Dr} & \text { Cost of sales } & 190000 & \
\hline \mathrm{Cr} & \text { Inventory } & & 190000 \
\hline \mathrm{Cr} & \text { Sales } & & 226718 \
\hline
\end{array}$

$30 \text { June } 2013$
$\begin{array}{|c|l|c|c|}
\hline\mathrm{Dr} & \text { Cash } & 62000 & \
\hline \mathrm{Cr} & \text { Interest revenue } & & 13603 \
\hline \mathrm{Cr} & \text { Lease receivable } & & 48397\
\hline
\end{array}$ 
C)  01 July 2012
$\begin{array}{|c|l|c|c|}
\hline \mathrm{Dr} & \text { Lease receivable } & 226718 & \
\hline \mathrm{Cr} & \text { Machine } & & 190000 \
\hline \mathrm{Cr} & \text { Deferred gain } & & 36718 \
\hline
\end{array}$

$30 \text { June } 2013$ 
$\begin{array}{|l|l|r|r|}
\hline \mathrm{Dr} & \text { Cash } & 62000 & \
\hline \mathrm{Dr} & \text { Deferred gain } & 9180 & \
\hline \mathrm{Cr} & \text { Interest revenue } & & 13603 \
\hline \mathrm{Cr} & \text { Lease receivable } & & 57577 \
\hline
\end{array}$ 
D)  01 July 2012
$\begin{array}{|l|l|r|r|}
\hline \mathrm{Dr} & \text { Lease receivable } & 263000 & \
\hline \mathrm{Cr} & \text { Unearned interest } & & 36282 \
\hline \mathrm{Cr} & \text { Machine } & & 226718 \
\hline
\end{array}$

$30 \text { June } 2013$
$\begin{array}{|r|l|r|r|}
\hline \mathrm{Dr} & \text { Cash } & 62000 & \
\hline \mathrm{Cr} & \text { Unearned interest } & & 9071 \
\hline \mathrm{Cr} & \text { Lease receivable } & & 52929 \
\hline
\end{array}$

Question 16

Discuss how entities with debt-to-asset constraints are affected by the classification of leases as either finance or operating leases.What are the implications for lease accounting?

Accepted Answer

Assume that a company has assets of €10

Question 17

If there is reasonable assurance at the inception of the lease that the lessee will obtain ownership of the assets at the end of the lease term,then the leased asset should be depreciated over the lease term.

Accepted Answer

A) True 
 B)False

Question 18

In the situation where there is an unguaranteed residual in a finance lease agreement,the leased asset will be recorded in the books of the lessee at an amount less than its fair value at the inception of the lease.

Accepted Answer

A) True 
 B)False

Question 19

A guaranteed residual value is that part of the residual value that is guaranteed by the lessee,or by a party related to the lessee.

Accepted Answer

A) True 
 B)False

Question 20

Snowy River Plc is a lessee to two lease arrangements.Lease A is non-cancellable,contains a bargain purchase option and the lease term is equal to 75% of the economic life of the asset.Lease B is non-cancellable,lease term is less than 60% of the economic life of the asset and the minimum lease payment represents 75% of the fair value of the leased asset. How should Snowy River Plc classify Lease A and Lease B respectively?

Accepted Answer

A) operating lease; operating lease 
B) operating lease; finance lease 
C) finance lease; finance lease 
D) finance lease; operating lease 
A) operating lease; operating lease 
B) operating lease; finance lease 
C) finance lease; finance lease 
D) finance lease; operating lease

Lease rentals representing a recovery of material executory costs are to be treated by the lessor as:

In the case of a finance lease,the accounting treatment by the lessee could:

Explain the benefits of a sale and leaseback transaction.

The term 'bargain purchase option' is not used explicitly in IAS 17 but is described as:

For a depreciable asset,the amount of depreciation recognised shall be in accordance with IAS 16.The asset shall be:

The following is an extract from a lease payment schedule for Lipton Pty Plc.What is the present value of the lease liability at 30 June 2012? Date Lease payment Interest expense Present value of lease liability 1-Jul-11 17039 30 -Jun-12 3500 1704 ?

From the perspective of the lessor,finance leases can be further classified into:

The following is an extract from a lease payment schedule for Lessee Pty Limited.What is the present value of the lease liability at 30 June 2012? Date Lease payment Interest expense Present value of lease liability 01 July 2011 21506 30 June 2012 3500 2,151 ?

At inception of the lease,what is the cost basis of an asset acquired from a lease arrangement when the lease is classified as a finance lease?

Discuss the presentation and disclosure requirements of operating leases under IAS 17.

A non-cancellable lease is a lease that is cancellable only:

Discuss how entities with debt-to-asset constraints are affected by the classification of leases as either finance or operating leases.What are the implications for lease accounting?

If there is reasonable assurance at the inception of the lease that the lessee will obtain ownership of the assets at the end of the lease term,then the leased asset should be depreciated over the lease term.

In the situation where there is an unguaranteed residual in a finance lease agreement,the leased asset will be recorded in the books of the lessee at an amount less than its fair value at the inception of the lease.

A guaranteed residual value is that part of the residual value that is guaranteed by the lessee,or by a party related to the lessee.

An Overview of the International External Reporting Environment

The Conceptual Framework of Accounting and Its Relevance to Financial Reporting

Theories of Financial Accounting

An Overview of Accounting for Assets

Depreciation of Property, Plant and Equipment

Revaluations and Impairment Testing of Non-Current Assets

Inventory

Accounting for Intangibles

An Overview of Accounting for Liabilities

Share Capital, Reserves and Share Options Employee Bonus Schemes

Accounting for Financial Instruments

Revenue Recognition Issues

The Statement of Comprehensive Income and Statement of Changes in Equity

Accounting for Income Taxes

The Statement of Cash Flows

Events Occurring After the Reporting Date

Related-Party Disclosures

Earnings Per Share

Further Consolidation Issues I: Accounting for Intragroup Transactions

Further Consolidation Issues II: Accounting for Non-Controlling Interests

Further Consolidation Issues III: Accounting for Indirect Ownership Interest

Accounting for Foreign Currency Transactions

Translating the Financial Statements of Foreign Operations

Accounting for Corporate Social Responsibility

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Exam 10: Accounting for Leases

Lease rentals representing a recovery of material executory costs are to be treated by the lessor as:

In the case of a finance lease,the accounting treatment by the lessee could:

Explain the benefits of a sale and leaseback transaction.

The term 'bargain purchase option' is not used explicitly in IAS 17 but is described as:

For a depreciable asset,the amount of depreciation recognised shall be in accordance with IAS 16.The asset shall be:

The following is an extract from a lease payment schedule for Lipton Pty Plc.What is the present value of the lease liability at 30 June 2012? Date Lease payment Interest expense Present value of lease liability 1-Jul-11 17039 30 -Jun-12 3500 1704 ?

From the perspective of the lessor,finance leases can be further classified into:

The following is an extract from a lease payment schedule for Lessee Pty Limited.What is the present value of the lease liability at 30 June 2012? Date Lease payment Interest expense Present value of lease liability 01 July 2011 21506 30 June 2012 3500 2,151 ?

At inception of the lease,what is the cost basis of an asset acquired from a lease arrangement when the lease is classified as a finance lease?

Discuss the presentation and disclosure requirements of operating leases under IAS 17.

A non-cancellable lease is a lease that is cancellable only:

Discuss how entities with debt-to-asset constraints are affected by the classification of leases as either finance or operating leases.What are the implications for lease accounting?

If there is reasonable assurance at the inception of the lease that the lessee will obtain ownership of the assets at the end of the lease term,then the leased asset should be depreciated over the lease term.

In the situation where there is an unguaranteed residual in a finance lease agreement,the leased asset will be recorded in the books of the lessee at an amount less than its fair value at the inception of the lease.

A guaranteed residual value is that part of the residual value that is guaranteed by the lessee,or by a party related to the lessee.

An Overview of the International External Reporting Environment

The Conceptual Framework of Accounting and Its Relevance to Financial Reporting

Theories of Financial Accounting

An Overview of Accounting for Assets

Depreciation of Property, Plant and Equipment

Revaluations and Impairment Testing of Non-Current Assets

Inventory

Accounting for Intangibles

An Overview of Accounting for Liabilities

Share Capital, Reserves and Share Options Employee Bonus Schemes

Accounting for Financial Instruments

Revenue Recognition Issues

The Statement of Comprehensive Income and Statement of Changes in Equity

Accounting for Income Taxes

The Statement of Cash Flows

Events Occurring After the Reporting Date

Related-Party Disclosures

Earnings Per Share

Further Consolidation Issues I: Accounting for Intragroup Transactions

Further Consolidation Issues II: Accounting for Non-Controlling Interests

Further Consolidation Issues III: Accounting for Indirect Ownership Interest

Accounting for Foreign Currency Transactions

Translating the Financial Statements of Foreign Operations

Accounting for Corporate Social Responsibility

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