alleryStart learning →Under the IFRS approach, when is a lease a finance lease?
AThe lessor is a bank
BRent is paid monthly
CRisks pass to the lessee
DTerm is under a year
Answer & Solution
Correct answer: C. Risks pass to the lessee
If substantially all the risks and rewards of ownership transfer to the lessee, the lease is classified as a finance lease.
Keep practising Sources of Finance
Browse all Sources of Finance questions for CA Inter, or explore more Financial Management topics.
Related questions
What is the usual outcome at the end of a finance lease, as in hire purchase?Under operating lease treatment, what happens to leverage ratios?How does capitalising a finance lease affect the balance sheet?Who is typically the legal owner of the asset during a finance lease?Historically, how have many IPOs been priced relative to market demand?In a Dutch auction IPO, what do all successful bidders pay?A greenshoe option usually lets underwriters raise the offering by up to what percentage?What is the fee retained by underwriters out of IPO proceeds called?