Tutorial_4.pptx - Q1.How a lease contract can be identified...

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Q1.How a lease contract can be identified under MFRS16? Answer: Whether the fulfilment of the contract depends on the use of an identified asset , and whether the contract conveys the right to control , the use of the identified asset for a period of time in exchange for consideration, obtain economic benefits .
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Q2. Finance Lease VS Operating Lease Finance Lease OWNERSHIP: Transfer option at the end of the lease period is there with the lessee ACCOUNTING EFFECT: Treated like loan. The asset ownership is considered by the lessee and asset appears on the balance sheet. LEASE TERM Generally major of the estimated economic life of the asset leased TAX BENEFIT: No depreciation can be claimed for lessor Operating Lease OWNERSHIP : Remains with the lessor for the entire lease period ACCOUNTING EFFECT: Treated like renting. The lease payment are treated as operating expenses and the asset does not show on the balance sheet LEASE TERM : Extends to less
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  • Fall '19
  • Finance lease, 75%, 20 years, two-year, ROU

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