IFRS 16 Leases deems cancellable leases with which of the following characteristics to be non-cancellable: $$\begin{array} { | l | l | l | l | l | }
\hline&I&II&III&IV\
\hline \begin{array} { l }
\text { Leases that can be cancelled upon the occurrence of } \
\text { some remate contingency }
\end{array} & \text { No } & \text { Yes } & \text { Yes } & \text { Yes } \
\hline \begin{array} { l }
\text { Leases that can be cancelled only with the permission of } \
\text { the lessor }
\end{array} & \text { Yes } & \text { No } & \text { Yes } & \text { Yes } \
\hline \begin{array} { l }
\text { Leases where the lessee, upon cancellation, is committed } \
\text { to enter into a further lease with the same lessor }
\end{array} & \text { Yes } & \text { Yes } & \text { Yes } & \text { No } \
\hline \begin{array} { l }
\text { Leases that require the lessee to pay a substantial penalty } \
\text { on cancellation }
\end{array} & \text { Yes } & \text { Yes } & \text { Yes } & \text { No } \
\hline
\end{array}$$
A) I;
B) II;
C) III;
D) IV.

Question

IFRS 16 Leases deems cancellable leases with which of the following characteristics to be non-cancellable: $$\begin{array} { | l | l | l | l | l | } 
\hline&I&II&III&IV\
\hline \begin{array} { l } 
\text { Leases that can be cancelled upon the occurrence of } \
\text { some remate contingency }
\end{array} & \text { No } & \text { Yes } & \text { Yes } & \text { Yes } \
\hline \begin{array} { l } 
\text { Leases that can be cancelled only with the permission of } \
\text { the lessor }
\end{array} & \text { Yes } & \text { No } & \text { Yes } & \text { Yes } \
\hline \begin{array} { l } 
\text { Leases where the lessee, upon cancellation, is committed } \
\text { to enter into a further lease with the same lessor }
\end{array} & \text { Yes } & \text { Yes } & \text { Yes } & \text { No } \
\hline \begin{array} { l } 
\text { Leases that require the lessee to pay a substantial penalty } \
\text { on cancellation }
\end{array} & \text { Yes } & \text { Yes } & \text { Yes } & \text { No } \
\hline
\end{array}$$
A) I;
B) II;
C) III;
D) IV.

Quizplus · Accepted Answer

IFRS 16 considers leases non-cancellable if they can only be cancelled with the permission of the lessor, if the lessee is committed to enter into a further lease upon cancellation, or if cancellation requires the lessee to pay a substantial penalty. These conditions make it difficult for the lessee to cancel the lease, effectively making the lease non-cancellable from a practical standpoint.

IFRS 16 Leases Deems Cancellable Leases with Which of the Following