Quiz on Leases

1. The party to the lease who was the owner of the right of use asset.
2. The party to the lease who has acquired rights to use the underlying asset.
3. When does the right of use asset be recognized in the books?
4.5. Under what conditions that a lessee is allowed not to account the lease contract under the finance
lease model?
6. What is the treatment of the lease payments under the operating lease model?
7. What is the basis in determining the value of the asset for purposes of classifying it as low value
lease or not?
8.
9. Give the costs that comprise the initial cost of the right of use asset.
10.
11.
12. What is the measurement model to be used for the asset in the subsequent periods as provided in
paragraph 29 of IFRS 16?
13. Under what conditions when the asset may not be measured under the model in no.12?
14. For how long should a right of use asset be depreciated if the asset is expected to revert to the
lessor at the end of the lease term?
15&16. Give 2 items that may be included in the calculation of lease payments.
17. If the bargain purchase option price is included in the initial lease liability, will the guaranteed
residual value of the asset be included as well?
18. What is the treatment of the difference between the carrying amount of the asset and lease
liabilitity if the bargain purchase option is not exercised?
19. What will happen if the fair value amount of the underlying asset is less than the guaranteed
residual value upon return of the asset to the lessor?
20. Give the pro-forma entry to record the return of the asset to the lessor if the lease includes an
unguaranteed residual value.
21 to 24. What are the criteria for a lease to qualify as finance lease in the books of the lessor?
25. Under the operating lease contract, what is the lessor’s treatment of the lease payments?
26. State the treatment of security deposit both in the books of the lessee and the lessor.
27. State the treatment of lease bonus received by the lessor both in the books of the lessee and the
lessor.
28. How does the lessor recognize rental revenue if the contract involves unequal rent amounts?
29. What is the primary difference between direct financing lease and sales type lease?
30 to 33: Show in tabulated format the determination/treatment of the following items under direct
financing lease or sales type lease:
 Gross investment
 Net investment
 Unearned interest income
 Initial direct cost
34. How is Lease Receivable presented in the balance sheet?