What additional issues are addressed by leases entered into by manufacturers or dealers?

Select one:

a.Presentation and disclosure

b.Measurement and recognition

c.Classification and recognition

d.Disclosure and measurement

- Consider the following statements: A sale-and-leaseback transaction, as far as the seller is concerned, can:(a) generate neither a profit nor a loss, (b) can generate an immediate profit but not a deferred profit, (c) can generate a deferred profit but not an immediate profit, (d) can generate an immediate loss but not a deferred loss:

Select one:

a.All are incorrect

b.All are correct

c.Only (a) is correct

d.Only (b) and (d) are correct

- What is defined as the non-cancellable period for which the lessee has a right to use an underlying asset?

Select one:

a.Lessor rights

b.Lease term

c.Bargain-purchase window

d.Lessee rights

- Managers will often have strong incentives to favour operating leases over finance leases. This is because:

Select one:

a.finance leases are recorded on the balance sheet. This results in a decreased debt ratio and a lower return on total assets

b.finance leases are recorded on the balance sheet. This results in an increased debt ratio and a lower return on total assets

c.None of the responses. Managers do not prefer operating leases

d.operating leases are recorded on the balance sheet. This results in an increased debt ratio and a lower return on total assets

-Which of the following is a factor considered by the lessor at the commencement date regarding the possible termination of a lease?

Select one:

a.Purchase options that are significantly above market rates

b.The amount of any fixed payments

- Tomfoolery Ltd enters into a sale-and-leaseback arrangement for an aircraft it owns. The resulting lease is classified as a finance lease. The details are as follows: Carrying amount of asset $50 000, Proceeds from sale of asset $60 000, Annual lease payment amount $8000. According toAASB117, Tomfoolery should make which of the following entries to record the sale:

Select one:

a.No entry is required as Tomfoolery will still own the asset in an economic sense

b.Dr Aircraft $60 000, Cr Cash at bank $50 000 ,Cr Deferred gain on sale $10 000

c.Dr Cash at bank $60 000, Cr Aircraft $50 000, Cr Deferred gain on sale $10 000, Dr Aircraft under lease $60 000, Cr Lease liability $60 000

d.Dr Cash at bank $60 000, Cr Aircraft $50 000, Cr Gain on sale income $10 000, Dr Aircraft under lease $60 000, Cr Lease liability $60 000

- Which of the following is not expected to have the potential to be affected by the new leasing approach being developed by IFRS 16?

Select one:

a.Regulatory capital requirements

b.Debt covenants

c.Lease disclosure requirements

d.Tax and dividend payments

- What is defined as the sum of the lease payments received by a lessor under a ?nance lease and any unguaranteed residual value accruing to the lessor?

Select one:

a.Gross investment in the lease

b.Guaranteed minimum lease payment

c.Lease receivable

d.Net investment in the lease

- A typical lease agreement will always set out all of the following except:

Select one:

a.the amount and timing of the lease (rental) payments

b.that the lease is non-cancellable by either party

c.the period of the lease

d.who is responsible for the payment of maintenance and repair costs, insurance and taxes