AASB 117 defines a non-cancellable lease to mean a lease that is cancellable in limited circumstances only if:
A)the lessor cancels with the permission of the lessee.
B)some remote contingency occurs.
C)the lessor incurs a penalty large enough to discourage cancellation.
D)the lessee can cancel the lease at any time without any significant impediment or economic disincentive.

Question

Quizplus · Accepted Answer

According to AASB 117, a non-cancellable lease is a lease that cannot be canceled by the lessee or the lessor, except in the occurrence of some remote contingency (such as the destruction of the leased asset) that is not expected to happen during the lease term. Therefore, option B is the correct answer as it states the limited circumstances under which a non-cancellable lease can be canceled.

AASB 117 Defines a Non-Cancellable Lease to Mean a Lease