Nama : Wina Anindya

Nim : 12030116120072
kelas : C

CHAPTER 21 ( Accounting of Leases)

1. What is the objective of lease classification criteria ?
Answer :
The classification of leasses adopted in this standard is based on the extent to which risk and
rewards incidental to ownership of a leassed asset lie with the lessor or the lessee. Risk include the
possibillities of losses from idle capacity or technological obsolescence and of variations in return
because of changing economic conditions. Reward may be represented b the expectation of
profitable operation over the asset’s economic life and of gain from aprreciation in value or
realisation of a residual value. In another hand, a lease is classification as a finance lease if it
transfers substantially all the risk and rewards incidental to ownership. A lease is classified as an
operating lease if it doesnt transfer substantially all the risk and rewards incidental to ownership.

2. An important element of evaluating leasses is determining whether substantially all of the risks
and rewards of ownership are transferred in the lease. How is “Susbstantially all” define in the
authoritative literature ?
Answer :
IAS 17 doesnt define “Susbstantially all”.

3. Besides the non-cancelable term of the lease, name at least three other consideration in
determining the “lease term”
Answer :

IAS 17 doesnt name other considerations in determining “lease term”, but paragraph 4 defines “lease
term” as the non cancellable period for which the leasses the contracted to lease the asset together
with any further terms for which the leasses has the option to continue to lease the asset, with or
without further payment when atthe inception of the lease it is reasonably certain that the leasses
will exercise the option.
Professional Simulation
Simulation 1

Date Leasse Payments Interest Expense Reduction Saldo

(12%)
1-Jan-15 400,000
1-Jan-15 81,365 81,365 318,635
1-Jan-16 81,365 38,236.20 43,128.80 275,506.20
1-Jan-17 81,365 33,060.74 48,304.26 227,201.94
1-Jan-18 81,365 27,264.23 54,100.77 173,101.18
1-Jan-19 81,365 20,772.14 60,592.86 112,508.32
1-Jan-20 81,365 13,501.00 67,864.00 44,644.32
31-Dec-20 50,000 5,357.32 44,642.68 1.63
538,190 138,191.63 399,998.37

Journal Entries :
1-Jan-15 Leased equipment 400,000
Lease liability 400,000
Lease liability 81,365
Cash 81,365
2015 Lease executary expense 4,000
Cash 4,000
31-Dec-15 Interest expense 38,236
Interest payable 38,236
Depreciation expense 58,333
Acc. Dep. - Leased Equipment 58,333
1-Jan-16 Interest payable 38,236
Interest expense 38,236
Interest expense 38,236
Lease liability 43,129
Cash 81,365
2016 Lease executary expense 4,000
Cash 4,000
31-Dec-16 Interest expense 33,061
Interest payable 33,061
Depreciation expense 58,333
Acc. Dep. - Leased Equipment 58,333