ACCA Advanced Taxation (ATX) Practice Exam

What does assignment of a lease refer to?

1. Transfer of ownership of leased property

2. Outright disposal of remaining lease period

3. Extension of lease terms

4. Modification of lease conditions

The correct answer is: Outright disposal of remaining lease period

Assignment of a lease refers specifically to the process by which a tenant transfers their rights and obligations under a lease agreement to another party for the remaining period of the lease. This effectively allows the new tenant to step into the shoes of the original tenant, inheriting the benefits and responsibilities associated with the lease. Option B accurately captures this concept as it emphasizes the outright disposal of the remaining lease period, meaning the original tenant is no longer involved in the lease, and the new tenant assumes control for the duration left on the lease. The legal relationship between the landlord and the new tenant is governed by the original lease terms as they continue under the same agreement, now held by the assignee. In contrast, the other options do not reflect the nature of lease assignment. The transfer of ownership of the leased property does not occur since the leaseholder does not gain ownership through assignment. Extensions or modifications of lease terms pertain to changes in the agreement itself rather than the transfer of leasehold interests.