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AFM Capsule Cards PRO Equipment Leasing/Lease F…
Under Ind AS 116, the owner of the asset must classify the lease agreement into one of two categories. What are these two distinct categories?
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Lessor Classification of Leases
Equipment Leasing/Lease Financing 41
WA 41
AFM Capsule Cards PRO Equipment Leasing/Lease F…
Firms need equipment but may not want to buy it outright. In financial terms, how is a 'Lease' formally defined?
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Meaning of a Lease
Equipment Leasing/Lease Financing 38
WA 38
AFM Capsule Cards PRO Equipment Leasing/Lease F…
What is the defining characteristic that classifies an arrangement strictly as a 'Finance Lease' under the guidelines of Ind AS 116?
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Finance Lease Definition
Equipment Leasing/Lease Financing 38
WA 38
AFM Capsule Cards PRO Equipment Leasing/Lease F…
Taxation rules dictate how lease payments are treated. Under the CGST Act of 2017, how is the transfer of the right to use goods (leasing) categorized?
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GST on Lease Transactions
Equipment Leasing/Lease Financing 38
WA 38
AFM Capsule Cards PRO Equipment Leasing/Lease F…
Accounting for leases has undergone major changes. Which specific Indian Accounting Standard (Ind AS) governs the classification and accounting of leases?
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Ind AS 116 Leasing Standard
Equipment Leasing/Lease Financing 37
WA 37
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AFM Capsule Cards PRO Equipment Leasing/Lease F…
Technology evolves rapidly, making expensive machinery outdated. How does leasing help a firm mitigate the 'Risk of Obsolescence'?
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Rationale: Avoiding Obsolescence
Equipment Leasing/Lease Financing 37
WA 37
AFM Capsule Cards PRO Equipment Leasing/Lease F…
How must a lessor record a Finance Lease on their balance sheet at the commencement date under Ind AS 116?
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Accounting in Books of Lessor (Finance Lease)
Equipment Leasing/Lease Financing 37
WA 37
AFM Capsule Cards PRO Equipment Leasing/Lease F…
Ind AS 116 dramatically changed how lessees report leases. What two key items must a lessee now recognize on their balance sheet for most leases?
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Accounting in Books of Lessee (Ind AS 116)
Equipment Leasing/Lease Financing 37
WA 37
AFM Capsule Cards PRO Equipment Leasing/Lease F…
Both parties want to claim tax benefits on the leased machinery. According to Indian Income Tax rules, who is legally entitled to claim depreciation?
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Income Tax: Depreciation Rule
Equipment Leasing/Lease Financing 36
WA 36
AFM Capsule Cards PRO Equipment Leasing/Lease F…
The Ind AS 116 standard provides relief for minor rentals to avoid accounting complexity. What two specific types of leases can a lessee exempt from balance sheet capitalization?
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Lessee Accounting Exemptions
Equipment Leasing/Lease Financing 36
WA 36
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AFM Capsule Cards PRO Equipment Leasing/Lease F…
If a lease doesn't meet the strict criteria of a finance lease, what is it classified as, and what does this imply about the asset's risks?
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Operating Lease Definition
Equipment Leasing/Lease Financing 35
WA 35
AFM Capsule Cards PRO Equipment Leasing/Lease F…
When a firm needs an asset, it compares buying it with a bank loan versus leasing it. What are the two main discounting techniques used to make this financial choice?
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Leasing as a Financial Decision
Equipment Leasing/Lease Financing 33
WA 33
AFM Capsule Cards PRO Equipment Leasing/Lease F…
Complex leases involve more than just two parties. What defines a 'Leveraged Lease' arrangement in corporate finance?
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Leveraged Lease
Equipment Leasing/Lease Financing 33
WA 33
AFM Capsule Cards PRO Equipment Leasing/Lease F…
Companies often prefer leasing over taking a bank loan to buy an asset. How does leasing potentially protect a firm's 'Borrowing Capacity'?
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Rationale: Borrowing Capacity
Equipment Leasing/Lease Financing 32
WA 32
AFM Capsule Cards PRO Equipment Leasing/Lease F…
When calculating the cash outflows of leasing versus buying, there is an 'opportunity cost' incurred at the end of a lease. What financial benefit does a lessee forfeit by not buying?
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Loss of Scrap Value in Leasing
Equipment Leasing/Lease Financing 29
WA 29
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AFM Capsule Cards PRO Equipment Leasing/Lease F…
To calculate NPV, you must identify the tax shields. In a 'Buy' scenario, you get a tax shield on depreciation. What is the equivalent tax shield in a 'Lease' scenario?
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Cash Flows of Leasing vs Buying
Equipment Leasing/Lease Financing 28
WA 28
AFM Capsule Cards PRO Equipment Leasing/Lease F…
When applying the NPV method to choose between leasing and buying an asset with borrowed funds, what specific discount rate must be used for the cash flows?
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Discount Rate for Lease vs Buy
Equipment Leasing/Lease Financing 26
WA 26
AFM Capsule Cards PRO Equipment Leasing/Lease F…
A company owns a massive factory but is facing a severe liquidity crisis. What specific leasing transaction can they execute to instantly unlock cash without losing the use of the factory?
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Sale and Leaseback
Equipment Leasing/Lease Financing 25
WA 25
AFM Capsule Cards PRO Equipment Leasing/Lease F…
In the aviation and shipping industries, lessors offer different service levels. What is the key difference between a Wet Lease and a Dry Lease?
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Wet Lease vs Dry Lease
Equipment Leasing/Lease Financing 29
WA 29
AFM Capsule Cards PRO Equipment Leasing/Lease F…
Leases can span across borders. If the lessor is in the USA, the lessee is in India, and the equipment is shipped globally, what specific risks characterize this International Lease?
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Domestic vs International Lease
Equipment Leasing/Lease Financing 29
WA 29
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Equipment Leasing/Lease Financing — JAIIB AFM Capsules

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All 20 cards on this page
Lessor Classification of Leases Under Ind AS 116, the owner of the asset must classify the lease agreement into one of two categories. W… Meaning of a Lease Firms need equipment but may not want to buy it outright. In financial terms, how is a 'Lease' formally… Finance Lease Definition What is the defining characteristic that classifies an arrangement strictly as a 'Finance Lease' under t… GST on Lease Transactions Taxation rules dictate how lease payments are treated. Under the CGST Act of 2017, how is the transfer o… Ind AS 116 Leasing Standard Accounting for leases has undergone major changes. Which specific Indian Accounting Standard (Ind AS) go… Rationale: Avoiding Obsolescence Technology evolves rapidly, making expensive machinery outdated. How does leasing help a firm mitigate t… Accounting in Books of Lessor (Finance Lease) How must a lessor record a Finance Lease on their balance sheet at the commencement date under Ind AS 11… Accounting in Books of Lessee (Ind AS 116) Ind AS 116 dramatically changed how lessees report leases. What two key items must a lessee now recogniz… Income Tax: Depreciation Rule Both parties want to claim tax benefits on the leased machinery. According to Indian Income Tax rules, w… Lessee Accounting Exemptions The Ind AS 116 standard provides relief for minor rentals to avoid accounting complexity. What two speci… Operating Lease Definition If a lease doesn't meet the strict criteria of a finance lease, what is it classified as, and what does… Leasing as a Financial Decision When a firm needs an asset, it compares buying it with a bank loan versus leasing it. What are the two m… Leveraged Lease Complex leases involve more than just two parties. What defines a 'Leveraged Lease' arrangement in corpo… Rationale: Borrowing Capacity Companies often prefer leasing over taking a bank loan to buy an asset. How does leasing potentially pro… Loss of Scrap Value in Leasing When calculating the cash outflows of leasing versus buying, there is an 'opportunity cost' incurred at… Cash Flows of Leasing vs Buying To calculate NPV, you must identify the tax shields. In a 'Buy' scenario, you get a tax shield on deprec… Discount Rate for Lease vs Buy When applying the NPV method to choose between leasing and buying an asset with borrowed funds, what spe… Sale and Leaseback A company owns a massive factory but is facing a severe liquidity crisis. What specific leasing transact… Wet Lease vs Dry Lease In the aviation and shipping industries, lessors offer different service levels. What is the key differe… Domestic vs International Lease Leases can span across borders. If the lessor is in the USA, the lessee is in India, and the equipment i…
Chapters in this paper
Definition, Scope & Accounting Standards including Ind AS Balance Sheet Equation Financial Management - An Overview Taxation: Income Tax/TDS/Deferred Tax Basic Accountancy Procedures Preparation of Final Accounts Ratio Analysis Goods & Services Tax Maintenance of Cash/Subsidiary Books and Ledger Company Accounts - I Financial Mathematics - Calculation of Interest and Annuities An Overview of Cost & Management Accounting Bank Reconciliation Statement Company Accounts - II Financial Mathematics - Calculation of YTM Costing Methods
Modules in AFM
MODULE A: Accounting Principles and Processes MODULE B: Financial Statements and Core Banking Systems MODULE C: Financial Management MODULE D: Taxation and Fundamentals of Costing
JAIIB papers
IE-IFS — Indian Economy & Indian Financial System PPB — Principles & Practices of Banking AFM — Accounting & Financial Management for Bankers RBWM — Retail Banking & Wealth Management
Study formats
All formats Capsule Cards Memory Tricks Infographics JAIIB Mock Tests 2026 All capsules
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