Under ASPE, which statement is correct for the lessee?
A)If the present value of the minimum lease payments exceeds the fair value of the leased asset, the asset will be recorded on the balance sheet at the higher amount.
B)If the present value of the minimum lease payments exceeds the fair value of the leased asset, the asset will be recorded on the balance sheet at the fair value amount.
C)If the present value of the minimum lease payments is lower that the fair value of the leased asset, the asset will be recorded on the balance sheet at the unguaranteed residual value amount.
D)If the present value of the minimum lease payments is lower that the fair value of the leased asset, the implicit rate must be used.

Question

Quizplus · Accepted Answer

Under ASPE (Accounting Standards for Private Enterprises) in Canada, when a lessee is accounting for a finance lease, if the present value of the minimum lease payments exceeds the fair value of the leased asset, the asset and the corresponding liability are recorded on the balance sheet at the lower of the present value of the minimum lease payments and the fair value of the leased asset. Therefore, if the present value of the minimum lease payments exceeds the fair value, the asset is recorded at the fair value amount.

Under ASPE, Which Statement Is Correct for the Lessee