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Chp 18 Leases IFRS 16 Example 4 – Doubt on Useful Life of Asset

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA SBR Exams › Chp 18 Leases IFRS 16 Example 4 – Doubt on Useful Life of Asset

  • This topic has 1 reply, 2 voices, and was last updated 3 months ago by Stephen Widberg.
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  • August 15, 2025 at 8:43 pm #718773
    satejvr
    Participant
    • Topics: 1
    • Replies: 0
    • ☆

    In the video explanation, the machinery is depreciated over 5 years (lease term). But the question mentions the lease type as finance lease, and the useful life is 6 years.
    Shouldn’t the asset then be depreciated over 6 years instead of 5 years as the ownership passes at the end of the lease term?

    August 18, 2025 at 3:31 pm #718829
    Stephen Widberg
    Keymaster
    • Topics: 16
    • Replies: 3436
    • ☆☆☆☆☆

    No reference in the scenario to ownership passing at the end of the lease.

    So, shorter of life and lease term

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