Examples of situations in AASB 117 that individually or in combination would normally lead to a lease being classified as a finance lease include:
A)the lease transfers ownership of the asset to the lessee by the end of the lease term
B)the lease term is for a minor part of the economic life of the asset is not transferred
C)the lease transfers ownership of the asset to the lessor by the end of the lease term
D)none of the above

Question

Quizplus · Accepted Answer

If the lease transfers ownership of the asset to the lessee by the end of the lease term, it would usually lead to the lease being classified as a finance lease, as the lessee has effectively purchased the asset through the lease. Options B and C describe situations that would typically result in the lease being classified as an operating lease, rather than a finance lease. Option D is not a valid choice, as one of the options (option A) does meet the criteria for a finance lease.

Examples of Situations in AASB 117 That Individually or in Combination