Under IFRS,which of the Following Is an Indicator of a Situation

question 57

Multiple Choice

Under IFRS,which of the following is an indicator of a situation (individually or in combination) that could lead to a lease being classified as a finance lease?

• A)If the lessor can cancel the lease,the lessee's losses associated with the cancellation are borne by the lessor.
• B)The lessee has the ability to continue the lease for a secondary period at a rent that is substantially lower than market rent.
• C)Gains or losses from the fluctuation in the fair value of the residual accrue to the lessor.
• D)All of the choices are indicators.

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Definitions:

Income Statement

A financial document that provides an overview of a company's performance over a specific period, detailing revenues, expenses, and net earnings.

Net Operating Income

An indicator of a firm's earnings generated from its principal business activities, not accounting for interest and tax deductions.

Variable Costing

An accounting method that includes only variable production costs in product costs, excluding fixed overhead.

Absorption Costing

An accounting strategy that considers every manufacturing expense, including direct materials, direct labor, and overhead costs (both variable and fixed), in determining a product’s cost.