Leases

Question 1

Recognition criteria Under ASPE for leases

Answer 1

Any of the following:

1. The ownership of the asset transfer or there is a bargain purchase option at the end of the lease term
2. The lease period is at least 75% of the useful life of the asset
3. Present value of lease payments amount to at least 90% of the FMV of the asset

Question 2

Recognition criteria Under IFRS for leases

Answer 2

Any of the following:

1. The ownership of the asset transfer or there is a bargain purchase option at the end of the lease term
2. The lease period is at least 75% of the useful life of the asset
3. Present value of lease payments amounts to at least 90% of the FMV of the asset
4. The asset is of specialized nature and only the lessee can use it without modifications

Question 3

ASPE additional criteria to be met for the lessor of the lease

Answer 3

1. Credit risk associated with the lease is normal

2. Any unreimbursable costs incurred by lessor can be reliably estimated

Question 4

In a sale-leaseback, what is the ROU asset recognition amount

Answer 4

ROU Asset = PV Lease Pmt/FMV of asset x NBV

Question 5

In a sale-leaseback, what is the gain on sale recognition amount

Answer 5

Gain on sale = ( PV of lease/ FMV) - (( FMV- PV of lease)/FMV) x (FMV - NBV)

Question 6

What is a sale-leaseback

Answer 6

the asset is sold to the buyer and then the seller leases the asset from the buyer