Question

Question: All of the following statements about lease accounting under IFRS and GAAP are true except:

1. IFRS requires a year-by-year breakout of payments related to leasing arrangements.
2. IFRS is more general in its lease accounting provisions than is GAAP.
3. The IFRS leasing standard, IAS 17, is the subject of only three interpretations.
4. Finance leases under IFRS are capital leases under GAAP.

Short answer

Answer

The correct option is “a”.

Step-by-step solution

Meaning of Lease

A lease is a mutual agreement in which the lessee is the owner of the asset transfer rights to use the asset and equipment to the lessor for a specific price and time

Explaining the correct option

IFRS does not require a year-by-year breakout of payments related to leasing payments. If the basic resource isn't of low value, IFRS 16 makes a single lessee bookkeeping show and requires a lessee to perceive assets and liabilities for all leases with terms longer than 12 months.

So, option (a) is a false statement.

Explaining the incorrect option

Option b) Focusing on investors is one of the main reasons why IFRS is superior to GAAP. IFRS promises financial statements that are more precise, timely, and comprehensive. Similar to how it guarantees investors that this knowledge would inform their decisions.

Option c) IAS 17 indicates for lessors and lessees what divulgences and bookkeeping standards should be utilized regarding leases. License contracts include movie and video records, plays, original copies, licenses, and copyrights.

Option d) Lease classified as financial lease under IFRS, are classified as capital lease as per the GAAP, is the correct statement.