JMJ
Marist Brothers
Notre Dame of Dadiangas University
Accountancy Program
Intermediate Accounting 2 May 3, 2021
Lease Ms. DM. Javellana, CPA, MBA
Answer the following discussion questions:
1. What is a contract considered as a lease?
Answer:
A lease is a contract or part of a contract that conveys the right to use an
asset for a period of time in exchange for consideration. According to IFRS 16
it takes caution in determining whether or not a contract is, or contains a
lease contract. Under IFRS, a contract is or contains a lease, if
a.) There is an identified asset, and
b.) The contract conveys the right to control the use of the identified asset
for a period of time in exchange for consideration
2. What guidelines are observed to determine whether a contract
identifies an asset in a lease?
Answer:
There is an identified asset when that particular asset is stated specifically in
the contract or when there is no asset specified in the contract when the
other party can fulfill the terms of the contract by the use of a particular
asset. In the latter case, that particular asset is the identified asset. There is
no identified asset if the supplier of the asset has a substantive right to
substitute the asset. Such substitution right is considered when the supplier
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, has the practical ability to substitute an alternative asset and would benefit
economically from such substitution.
3. What is a right-of-use asset? At what amount should the lessee initially
recognize the right-of-use-asset?
Answer:
A contract conveys the right to control the use of the identified asset if the
customer has both the right to obtain substantially all of the economic
benefits from the use of identified asset and the right to direct the use of the
identified asset. The lessee initially recognize a lease liability at cost.
4. At what amount should the lessee initially recognize a lease liability?
What are the components in the measurement of the lease liability?
Answer:
The lease liability shall initially be measured at commencement date at the
present value of the lease payment that are not yet paid at that date,
discounted using the interest rate implicit in the lease, if that rate can be
readily determined.
The following are included in the measurement of the lease liability:
a.) Fixed payments including any in-substance fixed lease payments and
less any lease incentives
b.) Variable lease payments that depend on an index or rate
Page 2 of 6
Marist Brothers
Notre Dame of Dadiangas University
Accountancy Program
Intermediate Accounting 2 May 3, 2021
Lease Ms. DM. Javellana, CPA, MBA
Answer the following discussion questions:
1. What is a contract considered as a lease?
Answer:
A lease is a contract or part of a contract that conveys the right to use an
asset for a period of time in exchange for consideration. According to IFRS 16
it takes caution in determining whether or not a contract is, or contains a
lease contract. Under IFRS, a contract is or contains a lease, if
a.) There is an identified asset, and
b.) The contract conveys the right to control the use of the identified asset
for a period of time in exchange for consideration
2. What guidelines are observed to determine whether a contract
identifies an asset in a lease?
Answer:
There is an identified asset when that particular asset is stated specifically in
the contract or when there is no asset specified in the contract when the
other party can fulfill the terms of the contract by the use of a particular
asset. In the latter case, that particular asset is the identified asset. There is
no identified asset if the supplier of the asset has a substantive right to
substitute the asset. Such substitution right is considered when the supplier
Page 1 of 6
, has the practical ability to substitute an alternative asset and would benefit
economically from such substitution.
3. What is a right-of-use asset? At what amount should the lessee initially
recognize the right-of-use-asset?
Answer:
A contract conveys the right to control the use of the identified asset if the
customer has both the right to obtain substantially all of the economic
benefits from the use of identified asset and the right to direct the use of the
identified asset. The lessee initially recognize a lease liability at cost.
4. At what amount should the lessee initially recognize a lease liability?
What are the components in the measurement of the lease liability?
Answer:
The lease liability shall initially be measured at commencement date at the
present value of the lease payment that are not yet paid at that date,
discounted using the interest rate implicit in the lease, if that rate can be
readily determined.
The following are included in the measurement of the lease liability:
a.) Fixed payments including any in-substance fixed lease payments and
less any lease incentives
b.) Variable lease payments that depend on an index or rate
Page 2 of 6
