IFRS 16 Leases Definitions Quiz

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Questions and Answers

What is the definition of a lease according to IFRS 16?

A lease is a contract that conveys the right to use an underlying asset for a period of time in exchange for consideration.

Who is the lessor according to IFRS 16?

The lessor is the entity that provides the right-of-use asset and receives consideration in return.

What is a right-of-use asset in the context of leasing?

A right-of-use asset is the lessee's right to use an underlying asset over the lease term.

Under what conditions does a contract contain a lease according to IFRS 16?

A contract contains a lease if it conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Signup and view all the answers

How does IFRS 16 define the control of the asset's use by the customer?

The customer controls the asset's use if they have the right to substantially all of the identified asset's economic benefits and can direct its use. Signup and view all the answers

What are the components included in the initial measurement of the lease liability according to IFRS 16?

Fixed payments, variable payments, residual value guarantees, options to purchase the asset, termination penalties Signup and view all the answers

How is the right-of-use asset measured under the cost model for subsequent measurement?

At its initial cost less accumulated depreciation and impairment losses Signup and view all the answers

How should the right-of-use asset be initially recognized according to IFRS 16?

At cost, comprising the initial measurement of the lease liability, lease payments made before the commencement date, initial direct costs, and estimated costs of removing the asset Signup and view all the answers

What factors should be considered when calculating the lease term under IFRS 16?

Non-cancellable periods, periods covered by options to extend or terminate the lease Signup and view all the answers

How is depreciation calculated for the right-of-use asset under IFRS 16?

Depreciation is charged based on asset's remaining useful life if ownership transfers, or over the shorter of useful life and lease term Signup and view all the answers

Flashcards

Lease (IFRS 16 Definition)

A contract conveying the right to use an asset for a period in exchange for payment.

Lessor (IFRS 16)

The entity providing the right-of-use asset in a lease.