Question ID: CMA 0695 P2 Q12 (Topic: Intangible Assets)

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    This forum is restricted to members of the associated course(s).

    Georgios Filippatos
    Participant

    Why the ”Leaseholds” as the answer is not correct to this question? It doesn’t state it as ”Leasehold improvement” as it should be, so when someone asks me if ”Leasehold” is an intangible asset I would definitely say no. Right? or should I have assume that by leasehold it implies ”Leasehold improvement”? As someone that has English second language and being part of the IMA european chapter not sure how should I face this in my exam.

     

    Thank you!

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    Lynn Roden
    HOCK international

    Hello Georgios Filippatos,

    “Leasehold” generally does mean “Leasehold improvements.” However, even if you had interpreted it to mean a leased asset, a lease is an intangible asset that should be recorded on the balance sheet (along with the liability to make lease payments). That is a basic principle of the new leasing standards adopted in recent years by both U.S. GAAP and IFRS.

    Please see Study Unit 21, “Leases,” in Section A of your CMA Part 1, Volume 1 textbook. In the current edition, it begins on page 143.

    Lynn

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