Explain What Is Meant by a 'Direct Finance' Lease,and How

question 63

Essay

Explain what is meant by a 'direct finance' lease,and how such leases should be accounted under IAS 17.

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Definitions:

Big Bath Items

Large and often one-time charges taken by a company to write off or write down the value of assets, or to provide for expected future liabilities, sometimes used to manage earnings.

Restructuring

A process of reorganizing a company's structure, operations, or finances with the goal of increasing efficiency or to prepare the business for a sale, merger, or change in strategy.

GAAP

Generally Accepted Accounting Principles, a set of accounting standards and practices formally established to bring consistency to financial reporting.

Future Costs

Costs that are expected to be incurred in future periods as opposed to those already incurred or realized.