File Name: lease financing questions and answers .zip
What is IFRS 16 4. IAS 17 Leases March Leases of Land that do not transfer Title to the Lessee The IFRIC considered whether long leases of land would represent a situation when a lease of land would not normally be classified as an operating lease even though title does not transfer to the lessee.
Buying and maintaining equipment is expensive, and as soon as you invest in a piece of machinery, it's only a matter of time before a new version comes out, making yours obsolete or inferior. Due to the high costs involved in owning and operating equipment, many small business owners opt to lease rather than own. Leasing offers advantages that owning does not, including lower monthly payments, which are typically spread out over the course of months or years rather than delivered in a lump sum. Many commercial equipment leases also include service agreements or service add-ons, which offer peace of mind for business users and negate the need for in-house technicians. If your business needs new equipment or technology, but you can't afford it, leasing may be an option to consider.
A financial An operating A net None of the above answers are correct. Your firm currently has a current ratio of 1. The purpose of this move is to finance a more permanent portion of inventories with a longer maturity alternative. If the firm issues the term loan, new restrictive covenants will require that the current ratio remain at or above 2. Should the firm make this change or is there some obvious problem caused by this proposed change? Yes No, don't make the change; otherwise, the firm will be immediately violating the new restrictive covenant. No, don't make the change; this type of restrictive covenant is not common on a term-loan, and you should first try to have this covenant removed.
The accounting topic of leases is a popular Paper F7 exam area that could feature to varying degrees in Questions 2, 3, 4 or 5 of the exam. This topic area is currently covered by IAS 17, Leases. IAS 17, Leases takes the concept of substance over form and applies it to the specific accounting area of leases. When applying this concept, it is often deemed necessary to account for the substance of a transaction — ie its commercial reality, rather than its strict legal form. In other words, the legal basis of a transaction can be used to hide the true nature of a transaction. It is argued that by applying substance, the financial statements become more reliable and ensure that the lease is faithfully represented.
MCQs Papers Definitions. Lease MCQs? Howell Corporation, a publicly traded corporation, is the lessee in a leasing agreement with Brandon, Inc.
The lessee is the party leasing the property. The party receiving the payments from the lease that is, the owner of the property is the lessor. An operating lease, sometimes called a service lease, provides for both financing and maintenance. Generally, the operating lease contract is written for a period considerably shorter than the expected life of the leased equipment, and contains a cancellation clause. A financial lease does not provide for maintenance service, is not cancelable, and is fully amortized; that is, the lease covers the entire expected life of the equipment. In a sale and leaseback arrangement, the firm owning the property sells it to another firm, often a financial institution, while simultaneously entering into an agreement to lease the property back from the firm.
A finance lease also known as a capital lease or a sales lease is a type of lease in which a finance company is typically the legal owner of the asset for the duration of the lease, while the lessee not only has operating control over the asset, but also some share of the economic risks and returns from the change in the valuation of the underlying asset. A finance lease has similar financial characteristics to hire purchase agreements and closed-end leasing as the usual outcome is that the lessee will become the owner of the asset at the end of the lease, but has different accounting treatments and tax implications. There may be tax benefits for the lessee to lease an asset rather than purchase it and this may be the motivation to obtain a finance lease.
Download free exam past questions and answers for all Nigerian universities, polytechnics, colleges and professional institutions. Financial data for CC. Management accounting does form an integral part of the indicative content so questions on areas such as budgeting and variance analysis can and will appear again in future diets. Students are often in need of the financial accounting help from the experts who gives the opportunity to score more in exam. Accounting Principles 9 All All C. Interviews with suspects c. What basic financial statements can be found in a corporate annual report?
Finance Lease Questions and Answers. Test your understanding with practice problems and step-by-step solutions. Browse through all study tools. Question.
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