In determining if the risk and rewards of ownership have been transferred,IAS 17 states the following would indicate a finance lease is in effect:

Question

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All of the given answers are correct indicators of a finance lease as per IAS 17. Ownership transferring at the end of the lease term for a variable payment equal to its then fair value indicates that the lessee is expected to benefit economically from the asset. Contingent rent payments also suggest that the lessee has taken on a substantial risk. Lastly, a non-cancellable lease indicates that the lessee has control over the use of the asset for the majority of its economic life, which is a characteristic of finance leases.

In Determining If the Risk and Rewards of Ownership Have