What type of lease allows lessee off-balance-sheet financing under legacy accounting standards, but requires balance sheet capitalization under IFRS 16?
ACapital Lease
BDirect Financing Lease
COperating Lease
DFinance Lease
Explanation
* Legacy accounting treated Operating Leases off-balance-sheet as rent expense.
* IFRS 16 eliminated this distinction for lessees, requiring almost all operating leases to record Right-of-Use (ROU) assets and lease liabilities on the balance sheet.
Exam Relevance
- Topic: Financial Accounting
- Subtopic: Leases (IFRS 16)
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