In What Way Should Operating Leases Be Accounted for Under

question 17

Multiple Choice

In what way should operating leases be accounted for under IAS 17?

• A)The lease payments should be capitalized and shown on the balance sheet as an asset.
• B)The lease payments must be expensed by the lessee as they are incurred.
• C)IAS 17 is flexible, allowing both capitalization and expensing of operating lease costs.
• D)The lessee capitalizes the operating lease and the lessor expenses the lease.

---

Definitions:

Reward Allocation Norm

The set of principles or guidelines that govern how rewards, such as bonuses or recognition, are distributed among members of a group or an organization.

Reciprocity

A social norm of responding to a positive action with another positive action, rewarding kind actions as a way of ensuring mutual benefit or cooperation.

Status Hierarchy

An organizational or social system in which individuals or groups are ranked one above the other according to status or authority, influencing interactions and distribution of resources.

Status And Communication

The relationship between an individual's or group's social or professional standing and the manner or effectiveness of their interactions and information exchange.