Customer X enters into a contract with Supplier Y for the use of a specific car for one year. The car shall be modified according to the specifications of Customer X. Customer X shall have exclusive use of the car during the duration of the contract. If at any time the car is not working properly, Supplier Y shall provide a replacement car of the same type. Supplier Y cannot retrieve the car during the duration of the contract for reasons other than the default of Customer X. At the time of signing of contract, Supplier Y does not yet have the car described in the contract. Requirement: Identify if the contract is (or contains) a lease using the guidance in PFRS 16. Provide brief explanations.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
icon
Related questions
Question
100%
Customer X enters into a contract with Supplier Y for the use of a specific car for one year. The car shall be modified according to the specifications of Customer X. Customer X shall have exclusive use of the car during the duration of the contract. If at any time the car is not working properly, Supplier Y shall provide a replacement car of the same type. Supplier Y cannot retrieve the car during the duration of the contract for reasons other than the default of Customer X. At the time of signing of contract, Supplier Y does not yet have the car described in the contract. Requirement: Identify if the contract is (or contains) a lease using the guidance in PFRS 16. Provide brief explanations.
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 2 steps

Blurred answer
Knowledge Booster
Revenue Recognition
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education