Question

A short-term lease: Multiple Choice Must be accounted for by the short-cut method if using U.S. GAAP. Is defined as having a value of $10,000 or less. Is defined as having a lease term of fifteen months or less. Not required to be accounted for by the short-cut method if using IFRS.

Answer 1

Answer: Not required to be accounted for by the short-cut method if using IFRS.

Explanation:

A Short term Lease is one where a person or entity is granted the legal use of a space for a small period of time which is a year or less.

In calculating this, the Sixteenth International Financial Reporting Standards, IFRS 16, states that a Short Term lease may be charged directly to a Profit and Loss account.

It does not approve the use of the Shortcut method which is a qualitative measure of analysis that is ONLY approved under the US Accounting system (GAAP) and even then is not widely used.