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QUESTION 8 . Identify each of the following statements as True or False: According to AASB 16, lessees always have to recognise a lease on
QUESTION 8 . Identify each of the following statements as True or False: According to AASB 16, lessees always have to recognise a lease on their balance sheets whereas lessors can classify a lease as either a finance lease or an operating lease. For lessees, one of the implications of the on-balance sheet treatment of a lease is decreased return on total assets and increased debt ratio. If a lease is classified as a finance lease, lessors should depreciate the underlying asset over its economics useful life, rather than over the lease term. The carrying amount of an item of property, plant, and equipment should be adjusted to match its fair value at the measurement date as long as the fair value is reliably measured. An indicator suggesting a lease should be classified as an operating lease is when a lease contract can be cancelled by lessee at any point during the lease term
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