F5 Flashcards
1
Q
Operating Leases –> How is rental revenue/expense treated?
A
Allocate EVENLY over the entire life of the lease. Every month, the same expense/revenue will be recorded.
Add up total payments and allocate over the # of months in the lease term (even those with free/reduced rent)
**If given an annual amount due on a specific date each year, find the monthly expense/revenue to record J/E’s
2
Q
How do you classify a bond sinking fund on the B/S?
A
Classify as non-current asset, except for the portion that will be used to offset current bond liabilities (these are current assets)
3
Q
For IFRS, how are gains treated on sale-leaseback arrangements?
A
If the leaseback is financing type, all of the gain is deferred!! Then, amortize over lease term
- PV of MLP’s substantially all of FMV of asset
- Lease term is for entire useful life of asset
- Substantially all risks/rewards of ownership are transferred
