Leases

Question 1

Lease payments

Answer 1

Fixed payments (excluding service cost component) + residual value guarantee and/or price of a purchase option

Question 2

NZ IFRS 16 required assets and liabilities to be recognised by the lessee for all leases of more than 12 months with,

Answer 2

Lease asset / right of use asset and

Lease liability would be for lease payments over the lease term

Question 3

Lessee: lease payment

Answer 3

Interest expense + principle repayment

Question 4

Lessee interest expense

Answer 4

Interest rate x pv of outstanding lease liability

Question 5

Lessee principle repayment

Answer 5

Annual payment - interest expense

Question 6

Lessee right of use asset

Answer 6

Lease liability + direct costs

Question 7

Lessee pv of all lease payments

Answer 7

Up front payment + annual payments x rate appendix b

Question 8

Lessee journals lease asset and liability being recognised

Answer 8

Dr right of use asset
Cr. Lease liability
Cr cash

Question 9

Lessee journal entries
Allocating the future lease payments to interest expense reducing lease liability

Answer 9

Dr interest expense
Dr lease liability
Cr. Cash

Question 10

Lessee journal entries
Depreciate lease asset

Answer 10

Dr depreciation expense

   Cr cash

Question 11

Finance lease

Answer 11

Transfer of all risk and rewards

Not cancellable

Lease term / economic life, over 75% threshold

PV of all lease payments is more than 90% of the assets FV (LEASE PAYMENTS X RATE FROM APPENDIX B)

Question 12

Operating lease

Answer 12

Not all ownership

Short term lease

Cancel label

Less than 75% of threshold

Pv, less than 90%

Question 13

Lessor journal
Finance lease, it initially derecognise assrt + recognise receipt of lease payment

Answer 13

Dr lease receivable
Cr PPE

Dr Cash
Cr service income
Cr interest revenue
Cr lease receivable

Question 14

Lessor journals
Operating lease

Answer 14

Dr cash
Cr lease income