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If substantial risks and rewards are not transferred to the lessee; then it should be classified as a)Capital Lease b)Finance Lease c)Operating Lease?

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Question added by Shaikh Muhammad Yousuf , Manager Accounts , Al Wahdania Group of Companies
Date Posted: 2016/02/04
Rakesh Jaju
by Rakesh Jaju , Manager Finance & Operations , National Entertainment Company Tarfeeh LC

It is classified as Operating Lease. (IAS - Leases)

Finance lease and Capital lease are same only difference is that in Capital lease - Lessor agrees to transfer the ownership rights to the lessee after the completion of the lease period where as in Finance lease there is only an option to transfer the ownership rights to the lessee after the completion of the lease period.

Akam Dickson
by Akam Dickson , Cost Analyst , Emirates Glass LLC & Lumi Glass LLC (wholely owned by Dubai Investment)

C according to IAS all such leases should be classified as Operating Leases.

Frank Mwansa
by Frank Mwansa , ACCOUNTING LECTURER , FREELANCER

C. Operating lease. This is a short term lease.

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