1. Minimum lease payments for a lessee under IFRS include the following: Answer

		Required payments specified under the lease agreement
		Any amounts guaranteed by the lessee or by a related party to the lessee
		Direct costs of the lessee necessary to consummate the lease
		a. and b.

2. Which of the following factors typically is the most difficult to determine by a lessee when considering if the present value of the minimum lease payments at the beginning of the lease term is at least substantially all of the fair value of the leased asset? Answer

		Fair value of the leased asset
		Lessor's implicit interest rate
		Lessee's incremental borrowing rate
		Whether depreciable leased assets should be depreciated consistent with depreciation policies.

3. If a company is determining the present value of the minimum lease payments under a lease, what interest rate should be used as the discount rate using US GAAP? Answer

		The lessor's implicit interest rate if it is known.
		The company's incremental borrowing rate, even if the lessor's implicit interest rate is known.
		The lessor's implicit interest rate if it is known and if it is lower than the company's incremental borrowing rate.
		The lessor's implicit interest rate if it is known and if it is higher than the company's incremental borrowing rate.

4. If a company is determining the present value of the minimum lease payments under a lease, what interest rate should be used as the discount rate using IFRS? Answer

		The lessor's implicit interest rate if it is known.
		The company's incremental borrowing rate, even if the lessor's implicit interest rate is known.
		The lessor's implicit interest rate if it is known and if it is lower than the company's incremental borrowing rate.
		The lessor's implicit interest rate if it is known and if it is higher than the company's incremental borrowing rate.

5. Initial direct costs for capital/finance leases under US GAAP: Answer

		For direct-finance leases, these costs are capitalized as part of the net investment in the lease and amortized over the lease term so as to produce a constant periodic rate of return on the net investment.
		For both sales-type and direct-finance leases, these costs are capitalized as part of the net investment in the lease and amortized over the lease term to produce a constant periodic rate of return on the net investment.
		For both sales-type and direct-finance leases, these costs are added to the carrying value of the leased assets and depreciated over the lease term on the same basis as rental income, unless they are manufacturers or dealer lessors, in which case they must be expensed.
		For sales-type leases, these costs are expensed in the same period that the gain on the sale is recognized.
		a. and d.

6. Initial direct costs for capital/finance leases under IFRS: Answer

		These costs are capitalized as part of the net investment in the lease and amortized over the lease term to produce a constant periodic rate of return on the net investment.
		These costs are added to the carrying value of the leased assets and depreciated over the lease term on the same basis as rental income.
		These costs are added to the carrying value of the leased assets and depreciated over the life of the asset on the same basis as rental income.
		These costs are immediately expensed for only manufacturers and dealer lessors.
		b. and d.

7. The initial direct costs of an operating lease by a lessor: Answer

		Are deferred and allocated over the lease term in proportion to the recognition of rental income using US GAAP.
		Are first added to the carrying value of the leased asset using IFRS (excluding manufacturing and dealer lessors) and then recognized as expense over the lease term on the same basis as the rental income.
		Are deferred and allocated over the lease term in proportion to the recognition of rental income using both US GAAP and IFRS.
		Are immediately expensed using IFRS.
		a. and b., although the end result is the same.

8. The interest rate implicit in a lease is the discount rate that, at the inception of the lease, causes the aggregate present value of the minimum lease payments and residual value to be equal to: Answer

		The fair value of the asset.
		The fair value of the asset plus a normal profit margin.
		The fair value of the asset plus a guaranteed residual value.
		The fair value of the asset plus any initial direct costs of the lessor.