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CMA Final · Corporate Financial Reporting · Leases (Ind AS 116)

Which of the following matches the definition of a lease in Ind AS 116?

A lease is a contract, or part of a contract, that conveys the right to use an underlying asset for a period of time in exchange for consideration. Transfer of ownership or a minimum duration is not required by the definition.

  1. AA contract that transfers ownership of an asset to the other party after a fixed period
  2. BA contract, or part of a contract, that conveys the right to use an asset for a period of time in exchange for considerationCorrect
  3. CA contract under which one party provides services using its own assets for a fee, without any right of use passing
  4. DA contract that conveys the right to use an asset only if the lease term exceeds twelve months

Explanation

Appendix A defines a lease as a contract, or part of a contract, that conveys the right to use an asset (the underlying asset) for a period of time in exchange for consideration. Ownership transfer and a minimum twelve-month term are not part of the definition, so those options are wrong.

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