IAS17
A lease that is accounted for as an expense in the Profit and Loss
What is an Operating Lease?
When a customer elects to restate comparative financial statements as if IFRS 16 always applied.
What is full retrospective approach?
A lease with 100 Dell laptops (all the same), the total value of $150,000 is a balance sheet lease?
False - the individual asset is worth $1,500 and thus the asset is under the low value threshold.
Where the Landlord adds an amount to the lease for non-lease components, like taxes, insurance etc. and assumes the risk in any fluctuations, good or bad, to those non lease components.
What is a gross agreement?
Lessees MUST separate lease and non-lease components to calculate ROU and Lease Liability?
False, this is a policy election.
The process by which a lease is said to be a finance lease or an operating lease.
What is lease classification?
The place where non-lease components are accounted for.
What is the profit and loss?
This needs to happen when an asset is impaired. (Note: it happens in RE too)
What is a modification?
When a lessee is pretty sure they will exercise an option on their a lease agreement.
What is reasonably certain?
Having an audit trail for changes to leases and IFRS16 accounting is only a nice to have.
False - it is a requirement of the standard
Operating Lease payment commitments for the next 5 years are hidden here.
What is a Note to the financial statements?
Where an asset is of low value and does not need to be capitalised on the Balance Sheet
What is an immaterial lease?
A lease for a used photocopier for $5,000 ($15,000 new) is a balance sheet lease?
True, the low value threshold is based on the value of the asset, new. (KPMG interpretive response)
When a lessee decides to exercise an option, say to renew a lease, that previously did not elect to do.
What is a reassessment?
From an accounting compliance point of view, there is a difference between EZLease and LeaseAccelerator SaaS.
False - Both EZLease and LeaseAccelerator will provide all the accounting journals for IFRS16 Compliance.
When the present value (PV) of the lease payments is less than 90% of the asset's fair market value.
What is an Operating Lease?
A difficult lease to detect because it has an underlying asset attached to a service agreement.
What is an Embedded Lease?
IFRS16 has made leasing difficult and so I am going to own all my assets.
What is hogwash? Leasing frees up cashflow and allows business to focus their capital into what makes them money (People/Product), not equipment that depreciates and needs to be replaced periodically. According to oil baron Paul Getty, “If it appreciates, buy it. If it depreciates, lease it.”
Where the Landlord adds an amount to the lease for the non lease components, like taxes, insurance etc. and charges a true-up if the charges are more than collected.
What is modified-gross?
LeaseAccelerator's functional currency is USD?
True - Functional currency is the primary currency used by a business or business unit. As a monetary unit of account, a functional currency represents the primary economic environment in which that entity operates.
When the lease term of an asset is for the major part of the economic life of the asset, even if title is not transferred.
What is a finance lease?
When a lease has finished it minimum term and moves to month by month, this is where it gets accounted for.
When a lease is modified and the IFRS 16 accounting changes.
What is a remeasurement?
A variable rate that a RE lease repayments can be increased by (can be found at the Bureau of Statistics).
What is CPI - Consumer Price Index
Optimism is the faith that leads to achievement. Nothing can be done without hope and confidence. - Helen Keller
True! Without optimism/faith or the hope to achieve, in business or in life, we wouldn't get out of bed in the morning. And confidence .. well .. it goes a long way!