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In: Accounting

Daniel Hardware Co. is considering alternative financing arrangements for equipment used in its warehouses. Besides purchasing...

Daniel Hardware Co. is considering alternative financing arrangements for equipment used in its warehouses. Besides purchasing the equipment outright, Daniel is also considering a lease. Accounting for the outright purchase is fairly straightforward, but because Daniel has not used equipment leases in the past, the accounting staff is less informed about the specific accounting rules for leases. The staff is aware of some general lease rules related to "right-of-use," but they are unsure how the accounting rules apply to their situation. Daniel has asked you to conduct some research on these items related to lease capitalization criteria.

Instructions:

Access the IFRS authoritative literature at the IASB website (http://eifrs.iasb.org/). (Click on the IFRS tab and then register for free eIFRS access if necessary.) When you have accessed the documents, you can use the search tool in your Internet browser to respond to the following questions. (Provide paragraph citations.)

(a) What is included in the measurement of (1) the lease liability and (2) the right-of-use asset?

(b) Besides the non-cancelable term of the lease, what are other considerations in determining the "lease term"?

(c) When should a lessee account for a lease modification? What procedures are followed?

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ekkarill92 answered 1 year ago
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