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CA Inter AS 19 Leases — practice questions — page 2

Explore 80 free AS 19 Leases questions in CA Inter Accounting. Open each question or exercise to read its content, reference answers and available explanation.

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AS 19 Leases questions and exercises with answers

Showing questions 31–60 of 80.

Can lessor and lessee classify one lease differently?Read the answer and worked solution →Which normally indicates a finance lease?Read the answer and worked solution →A lease term covering the major part of the asset's economic life points toRead the answer and worked solution →Finance lease if PV of minimum payments is nearly all of asset'sRead the answer and worked solution →An asset so specialised that only the lessee can use it without major modification suggests aRead the answer and worked solution →Which cancellation term hints at a finance lease?Read the answer and worked solution →A secondary period at a rent far below market rent is an indicator that the lease isRead the answer and worked solution →Lease terms change (not renewal) so the original classification would have differed. The revised agreement is treated asRead the answer and worked solution →Does a change in the estimated residual value of a leased asset reclassify the lease?Read the answer and worked solution →At inception of a finance lease the lessee recordsRead the answer and worked solution →A lessee books the lower of fair value and the PV ofRead the answer and worked solution →If the implicit rate is not known, the lessee discounts minimum lease payments at itsRead the answer and worked solution →A lessee's asset has fair value Rs 2,35,500 and PV of payments Rs 2,27,805. It is recorded atRead the answer and worked solution →A lessee's finance lease liability is presentedRead the answer and worked solution →Initial direct costs attributable to the lessee under a finance lease areRead the answer and worked solution →A lessee allocates the finance charge to give a constant periodic rate onRead the answer and worked solution →Depreciation of a finance-leased asset follows the standard onRead the answer and worked solution →Without certain ownership, a leased asset is depreciated over theRead the answer and worked solution →If ownership is reasonably certain at term end, the leased asset's period of expected use isRead the answer and worked solution →Impairment of a leased asset is assessed underRead the answer and worked solution →A lessee must disclose finance-leased assetsRead the answer and worked solution →Lessee disclosure bands for minimum lease payments are one year, one to five years andRead the answer and worked solution →Operating lease payments are expensed by the lessee onRead the answer and worked solution →Operating lease rent escalates yearly. The lessee generally expenses itRead the answer and worked solution →Operating lease rent is Rs 1,00,000, Rs 1,20,000 and Rs 1,40,000 over three years. Straight-line yearly expense?Read the answer and worked solution →A lessee discloses future minimum payments underRead the answer and worked solution →A lessor shows an asset given on finance lease as a receivable atRead the answer and worked solution →A lessor treats finance lease receipts as repayment of principal plusRead the answer and worked solution →If the estimated unguaranteed residual value rises, the lessorRead the answer and worked solution →A fall in unguaranteed residual already accrued as income isRead the answer and worked solution →

Worked practice questions

Can lessor and lessee classify one lease differently?

  1. No, it must always match
  2. Only if title transfers
  3. Yes, circumstances differ
  4. Only for hire purchase
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Correct answer: C. Yes, circumstances differ

Applying the same definitions to the different circumstances of each party can lead to different classifications of one lease.

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Which normally indicates a finance lease?

  1. Lessee can return it free anytime
  2. Term is a small part of life
  3. Ownership passes by end of term
  4. Lessor bears all obsolescence
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Correct answer: C. Ownership passes by end of term

Transfer of ownership to the lessee by the end of the lease term is the first listed example of a finance lease.

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A lease term covering the major part of the asset's economic life points to

  1. An operating lease
  2. A service contract
  3. A sale and leaseback
  4. A finance lease
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Correct answer: D. A finance lease

A term for the major part of economic life normally indicates a finance lease whether or not title passes.

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More Accounting topics

AS 3 Cash Flow StatementSchedule III Division I Financial StatementsValuation of Inventories (AS 2)AS 22 Taxes on IncomeAS 28 Impairment of AssetsProperty, Plant and EquipmentAS 17 Segment ReportingAS 13 Accounting for Investments