Which of the Following Factors Is Most Indicative That a Lease

question 64

Multiple Choice

Which of the following factors is most indicative that a lease should be recorded as a a finance lease under IFRS?

• A) Ownership of the property is transferred to the lessee at the end of the lease.
• B) The present value of the minimum lease payments is at least equal to the majority of the cost of the property at the lease's inception.
• C) The lease term equals at least 50% of the economic life of the asset.
• D) The leased asset can be transferred to a subsequent owner during the course of the lease.

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Definitions:

Commercial Draft

A written order from one party to another, directing the payment of a specified sum of money to a third party, often used in trade.

Banker's Acceptance

A short-term debt instrument issued by a company but guaranteed by a bank, commonly used in international trade.

Trade Acceptance

A written promise or a draft by one party, the seller, to another, the buyer, to pay a specified sum of money at a future date.

Sight Draft

A financial instrument that is payable on demand when presented to the drawee.