alleryStart learning →An 8-month lease carries a purchase option. Is it short-term?
AYes, if never exercised
BYes, term is under 12 months
CYes, if asset is low value
DNo, a purchase option bars it
Answer & Solution
Correct answer: D. No, a purchase option bars it
A purchase option takes the lease out of the short-term category whatever its length.
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Related questions
Ind AS 116 applies to annual reporting periods beginning on or after:At transition, a practical expedient lets an entity avoid reassessing:Modified retrospective adoption: the cumulative effect goes to:Asset worth Rs 5,00,000 sold for Rs 4,60,000 in leaseback at market rent. Rs 40,000 shortfSame sale-leaseback: total gain is Rs 2,00,000 and the retained right is 25% of fair valueSale-leaseback: carrying Rs 4,00,000; fair value Rs 6,00,000; PV of market lease payments A sale and leaseback transfer fails the sale test. The seller-lessee:In a sale and leaseback, whether the transfer is a sale is decided using: