International Accounting Standards IAS 17 requires that for an unqualified audit report,financial (or capital) leases must be included in the balance sheet.How should they be reported?

Question

Quizplus · Accepted Answer

According to IAS 17, financial leases should be reported as the present value of future lease payments as an asset, and also showing this same amount as an offsetting liability on the balance sheet. This reflects the fact that the lessee has acquired the right to use the leased asset for a period of time in exchange for making future lease payments, but also has an obligation to make those payments. This presentation also allows for the recognition of depreciation expense over the lease term for the leased asset. Therefore, choice C is the best option.

International Accounting Standards IAS 17 Requires That for an Unqualified