IFRS 16 · Workpapers (Step 4 of 5)
Workpaper assignment
- Course
- Exercises
- Case studies
- Workpapers
- Exams
Lessor accounting: classification, finance lease and operating lease: Lease A — line
Equipment lessor: classification, finance lease and operating lease
Section 1 of 9
Objective
Section brief
- What to document
- The engagement, its scope and the working mode chosen.
- Why
- A workpaper answers one precise question: framing it avoids off-topic work.
- How
- Read the objective and the assignment, then choose the mode (guided, semi-guided, professional).
- Expected result
- You know which question the workpaper must settle, and for which reporting date.
- Your role
- Preparer of the IFRS 16 workpaper
- Level
- Advanced
- Estimated time
- ≈ 55 min
- Progress
- 0 / 5 steps done (review excluded)
Context
Locatec Équipements (a fictitious company) buys industrial equipment from manufacturers in order to lease it; it is neither a manufacturer nor a dealer. On 1 January 20X1, it enters into two leases: lease A covers a packaging line leased to Bénard Emballages (a fictitious company) and lease B a mobile crane leased to Chantiers Morel (a fictitious company). For each lease, the inception date and the commencement date coincide and lease payments are received once a year, on 31 December, in arrears. You are preparing the closing at 31 December 20X1 for the lessor.
Assignment
Workpaper Lessor accounting: classification, finance lease and operating lease.
Purpose of the workpaper
Classify the lease at the inception date using the situations and indicators of a transfer of substantially all the risks and rewards; then, for a finance lease, measure the net investment at the implicit rate, any selling profit of a manufacturer or dealer and the finance income for the period; for an operating lease, calculate the straight-line income. Record the corresponding entries.
Questions of the file covered by this workpaper
- Calculate the present value of the lease payments of each lease and compare it with fair value.
- Calculate the net investment in lease A at 1 January 20X1.
- Which entry do you record at 1 January 20X1 for lease A?
- Calculate the finance income for 20X1 and the net investment in lease A at 31 December 20X1.
- Which entries do you record at 31 December 20X1 for lease A?
- Calculate the lease income for 20X1 on lease B.
- Which entry do you record at 31 December 20X1 for lease B?
Documents in the file
Open the documents to pick out the relevant information.