CFA Level 1 | jjyyyx7 | Question Treatment of Leases unde...

Financial Reporting and Analysis

Treatment of Leases under IFRS vs GAAP

Hard Financial Reporting Standards Comparison Of Ifrs And Gaap

XYZ Corporation is preparing its financial statements and needs to decide whether to follow IFRS or GAAP. The management is particularly concerned about the treatment of lease liabilities and how they affect the presentation of financials. Understanding the differences between IFRS and GAAP is essential for accurate reporting.

Under IFRS, leases are generally classified as:

All leases are treated as operating leases.

Leases are classified as either finance or operating leases, with a strong emphasis on the transfer of risks and rewards.

Only finance leases are recognized on the balance sheet, while all operating leases are off-balance sheet.

Hint

Submitted16.5K

Correct13.0K

% Correct79%