Australian-Financial-Accounting-7th-Edition-Test-Bank-Deegan_1to13

Chapter 11 Key

1. Contingent rent is included in the determination of minimum lease payments under AASB 117 Leases.

FALSE

Chapter – Chapter 11 #1
Difficulty: Easy
Section: 11.05 Lessee disclosure requirements
Section: Introduction

2. The discount rate to be used in calculating the present value of the minimum lease payments is the interest rate implicit to the lease, or if this is not practicable to do so, the lessor’s incremental borrowing rate.

FALSE

Chapter – Chapter 11 #2
Difficulty: Easy
Section: 11.01 Interest rate for determining the present value of the minimum lease payments
Section: Introduction

3. If the lease arrangement contains a bargain purchase option, it is reasonable to assume that the risks and rewards of ownership are transferred to the lessee.

TRUE

Chapter – Chapter 11 #3
Difficulty: Easy
Section: 11.08 Lessor accounting for lessors that are manufacturers or dealers of the leased asset

4. A leased asset classified as a finance lease is not subject to depreciation or amortisation.

FALSE

Chapter – Chapter 11 #4
Difficulty: Easy
Section: 11.02 Lessee accounting for finance leases

5. If there is reasonable assurance at the inception of the lease that the lessee will obtain ownership of the assets at the end of the lease term, then the leased asset should be depreciated over the lease term.

FALSE

Chapter – Chapter 11 #5
Difficulty: Medium
Section: 11.02 Lessee accounting for finance leases

6. In a sale and leaseback transaction, if the risks and rewards incidental to ownership effectively pass to the lessor, this arrangement is classified as a finance lease.

FALSE

Chapter – Chapter 11 #6
Difficulty: Easy
Section: 11.04 Lessee accounting for sale and leaseback transactions

7. AASB 117 applies to accounting for leases, including those that relate to lease arrangements to explore for or use natural resources.

FALSE

Chapter – Chapter 11 #7
Difficulty: Easy
Section: Introduction

8. Under a lease agreement, the lessee may have control of an asset even if the lessee does not have legal ownership. According to the AASB Framework this is not a sufficient basis for recording an asset.

FALSE

Chapter – Chapter 11 #8
Difficulty: Easy
Section: 11.06 Accounting by lessors
Section: Introduction

9. A finance lease is one in which substantially all the risks and benefits of ownership pass to the lessee.

TRUE

Chapter – Chapter 11 #9
Difficulty: Easy
Section: 11.01 Interest rate for determining the present value of the minimum lease payments
Section: Introduction

10. If a lease transfers ownership of the property to the lessee, or contains a bargain purchase option, then this is consistent with the lease being an operating lease.

FALSE

Chapter – Chapter 11 #10
Difficulty: Medium
Section: 11.03 Lessee accounting for operating leases