Week 7 - Leases Flashcards
1
Q
Definition of a Lease
A
Agreement for the right to use an asset for an agreed period of time for a payment/series of payment.
2
Q
How is a lease identified in IFRS 16
A
User must:
Have all economic benefits
Right to direct use of asset
3
Q
How to account for leases in the record of the LEASEE
A
Treat it like a loan to acquire an asset.
Debit - Right Of Use Asset
Credit - Lease Liability
4
Q
How would you account for finance costs for leases?
A
Debit - Finance Costs
Credit - Lease Liability
5
Q
How would you account for cash payments for a lease?
A
Debit - Lease Liability
Credit - Cash
6
Q
How is depreciation calculated for a lease
A
Ownership transferred
- Depreciation charged as usual
Ownership NOT transferred
- Depreciation charged on shorter of lease term and useful life
