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.
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.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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.
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