LEASES SCOPE/EXCLUSIONS

Size: px
Start display at page:

Download "LEASES SCOPE/EXCLUSIONS"

Transcription

1 LEASES SCOPE/EXCLUSIONS What is a lease? A lease is an agreement whereby the lessor conveys to the lessee in return for a payment or series of payments the right to use an asset for an agreed period of time. ASPE 3065 Exclusions IAS 17 Exclusions This section does not cover leasing agreements pertaining to the rights to explore for or to exploit natural resources, nor does it apply to licensing agreements for items such as motion pictures, videotapes, plays, manuscripts, patents and copyrights, etc. Operating Lease This Standard shall be applied in accounting for all leases other than: (a) leases to explore for/ use minerals, oil, and similar non-regenerative resources (b) licensing agreements for such items as motion picture films, video recordings, plays, manuscripts, patents and copyrights, etc. This Standard shall not be applied as the basis of measurement for: (a) property held by lessees that is accounted for as investment property; (b) investment property provided by lessors under operating leases ; (c) biological assets held by lessees under finance leases ; or (d) biological assets provided by lessors under operating leases (see IAS 41). ACCOUNTING TREATMENT BY A LESSEE ASPE 3065 Classification: Capital or Operating Lease Substantially all of the rewards 1 and risks 2 of ownership have been transferred to the lessee when ONE of the following 3 tests is met: Test #1: Is there a Transfer of Test #2: Is the Lease Test #3: Is the PV of minimum lease Ownership at end of lease term or Term 75% of Economic payments 5 90% of a Bargain Purchase Option 3? Life 4 of the asset? asset s Fair Value? Capital Lease Operating Lease 1 Rewards of ownership: expectation of profits and gain from value appreciation. 2 Risks of ownership: possibilities of losses from idle capacity or obsolescence. 3 Bargain purchase option: allows lessee to purchase leased property for a price sufficiently lower than FV. 4 Economic Life: remaining period during which the property is expected to be economically usable. 5 Minimum Lease payments: Minimum rental payments 6 + guaranteed residual value + penalty for not renewing or extending lease + bargain purchase option. 6 Minimum rental payments: Regular payment to lessor, exc l executory costs (ie. insurance, maintenance, tax). Insufficient Criteria (to be considered by lessees and lessors) The following by themselves are not sufficient evidence of a transfer of risks and rewards: 1. Lessee pays costs incident to ownership (in all leasing agreements, lessee pays for these costs). 2. Lessee has option to purchase asset for lessor s unrecovered investment (no assurance that lessee will exercise). 3. Leased property is special purpose to the lessee ( special purpose is relative and hard to define). IAS 17 Classification: Finance or Operating Lease Substantially all of the benefits and risks of ownership have been transferred to the lessee when ONE of the following 4 tests is met. Test #2: Test #3: Test #1: Is the lease term a major Do PV of minimum lease Is there a transfer of portion of the economic life of payments (excluding executory ownership or a bargain the lease asset? (no costs) cover substantially all of purchase option? (same as quantitative threshold, ASPE the FV of the leased asset (no ASPE) specifically states 75%) quantitative threshold, ASPE specifically states 90%)? Finance lease (called Capital lease under ASPE) Test #4: (additional IFRS test) Are the leased assets of such a specialized nature that only the lessee can use them 1 without P a g e major modifications? (no equivalent test under ASPE)

2 IAS 17 provides additional conditions that may lead to classification as a finance lease: the lessor s losses associated with the cancellation are borne by the lessee (if lessee can cancel the lease) the lessee can continue the lease for a secondary period at a rent substantially lower than market rent gains/losses from FV fluctuation of the residual accrue to the lessee (e.g. a sales rebate approximating sales proceeds at the end of the lease) Lease including Land and Building elements If land ownership will pass to lessee at end of lease term, classify elements separately on lessee s books. Otherwise, assess each element separately, allocating min. lease payments in proportion to relative FVs. If land is immaterial, treat land and building together as a single lease, using building s economic life. N.B.: Separate classification for each element NOT required when classification is investment property (IAS 40) Property interest is a finance lease and the fair value model is used for the asset recognized. Operating Lease Accounting Treatment LESSEE IAS 17 ASPE 3065 Lease Payments Other Recognized as an expense on a straight-line basis over the lease term even if payments are not so, unless another systematic basis is more representative of the benefit received, SIC 15: Costs incurred (including costs in connection with a pre-existing lease) are accounted for in accordance with the applicable standard. Includes costs effectively reimbursed through an incentive agreement. Incentives SIC 15: Incentives may be provided by a lessor to induce a lessee to enter into an agreement. Recognize aggregate benefit as a reduction of rental expense over the lease term. (Straight-line unless another systematic basis is more representative.) Disclosures In addition to IFRS 7: Total future minimum lease payments for noncancellable leases for: <1 year, 1-5 years, and >5 years Total future minimum sublease payments expected to be received for non-cancellable subleases Lease/sublease payments expensed in the period General description of significant leasing arrangements (including basis to determine contingent rent payable, renewal/purchase options, and restrictions) Finance Lease Treatment Same as IAS Upon renegotiation and lease term extension, continue to account as the original lease until the original lease term expires. Difference between payments is related to the term of the lease extension. Payments under a residual value guarantee are included in lease payments when it is likely the guarantee will be required. Lease inducements reduce the lease expense over the lease term. Future minimum lease payments (aggregate and for each of the five succeeding years) Nature of other commitments under the leases Exception: leases with an initial term of a year or less do not require these disclosures LESSEE IAS 17 ASPE 3065 Recognition Amount Discount Rate Allocation of Min Lease Payment Lower of: a) Fair value of leased property; and b) PV of min lease payments If practical, use implicit rate* and if not practical use incremental borrowing rate** Min. lease payments split between the finance charge and the reduction of the outstanding liability. The finance charge is at PV of min lease payments excluding executory costs*** but cannot exceed the fair value of the leased asset Lower of: a) Implicit interest rate; or b) Incremental borrowing rate Lease payments shall be allocated to a reduction of the obligation, interest expense and any related executory costs. The interest 2 P a g e

3 a constant rate based on the outstanding liability expense is calculated by applying the discount rate against the outstanding liability Contingent Rent Expensed Same as IAS 17 Direct**** Cost Costs directly attributable to specific leasing specific guidance activities are added to the asset Depreciation Amount Presentation Disclosures Same as guidance provided under IAS 16 and IAS 38 If lessee will not obtain ownership then depreciate over the shorter of the lease term and useful life Statement of Financial Position Asset Liability Each class of asset, the net carrying amount, reconciliation between the total of future minimum lease payments and their PV. Total of future minimum lease payments, and their present value for each period (<1 yr, 1-5 yrs, and >5 yrs) Contingent rents recognized as an expense Total of future minimum sublease payments expected to be received under non-cancellable subleases General description of significant leasing arrangements (including basis to determine contingent rent payable, renewal/purchase options, and restrictions) Same as guidance provided under 3061 Depreciate over lease term unless there is a term to pass ownership to lessee or a bargain purchase option exists. If either exists, amortize over economic life Present as: Asset separate from assets owned Liabilities separate from other long-term liabilities Lease obligations payable within a year should be classified as current liability Cost Accumulated amortization and amortization method used Interest rate Maturity date Amount outstanding If the leases are secured * implicit rate= the discount rate at inception date that causes the PV of (a) the min. lease payments and (b) the unguaranteed residual value to = the sum of (i) the FV of the asset and (ii) any initial direct costs of the lessor. ** incremental rate = rate would have to pay on a similar lease ***executory costs are costs related to the operation of the leased property (ie. insurance, maintenance cost) ****direct costs = costs directly attributable to negotiating and arranging a lease, (except for manufact./dealer) ACCOUNTING TREATMENT BY A LESSOR ASPE & IFRS Classification: Sales-Type, Direct Financing or Operating Lease From lessor s point-of-view, use the following to determine if the lease transfers substantially all of the risks and rewards of ownership to the lessee: Are any of the Lessee s capital lease criteria met? Is the credit risk associated with the lease normal 1? Operating Lease Are the unreimbursable costs to the lessor estimable? 2 IFRS does not explicitly state sales-type/direct finance lease but the application is similar to ASPE. Sales-Type Lease (ASPE: lessor is manufacturer/dealor) Does Leased Asset Value = Lessor s Book Value? Direct Finance (ASPE: lessor is primarily a financer) 3 P a g e

4 1 When considering collection risk associated with the lease, compare it to that of similar receivables 2 If costs to lessor are not estimable, the lessor may retain substantial risks associated with the leased asset N.B. A Lease can be a capital lease to the lessee but an operating lease to the lessor and if the lease is an operating lease to the lessee it will always be an operating lease to the lessor Accounting Treatment: Operating Leases LESSOR IAS 17 ASPE 3065 Asset Recorded according to nature of the asset specific guidance Lease Income Recognized in income on a straight-line basis over Same as IAS 17. lease term (even if the payments are not), unless another systematic basis is more representative of benefit pattern. Expenses Added to cost of assets (IAS 17.52) specific guidance Initial Direct Costs Initial direct costs added to carrying amount of leased asset. Recognized as an expense over the lease term on the same basis as the income. Initial direct costs (associated with a specific lease) are deferred and amortized over the lease term in proportion to the recognition of income. Depreciation In accordance with IAS 16 & 38 specific guidance Dealer Lessor recognition of selling profit because an operating specific guidance lease is not the equivalent of a sale Incentives SIC 15: Treated the same as initial direct costs. Recognize aggregate cost of incentives as a reduction of rental income over the lease term. (Straight-line unless another systematic basis is more representative of pattern that the benefit is diminished.) Disclosures In addition to IFRS 7: Total future minimum lease payments for noncancellable leases for each period (<1 yr, 1-5 yrs, and >5 yrs) Total contingent rents recognized as income during the period General description of leasing arrangements Cost of PP&E held for leasing purposes Amount of accumulated amortization of those properties Carrying amount of impaired operating lease receivables Amount of any related allowance for impairment Card Question #1: Company A enters into a 2-year lease with Company B. The first year s monthly payments are $2,000 each and the second year s monthly payments are $1,000 each (total $36,000). What is the journal entry under IAS 17 for the first month for Company A (lessee)? What are the entries for Company B (lessor)? Participation by a Third Party (ASPE ) A lessor can assign lease payments due under an operating lease to a third party. The transaction is accounted for as a secured loan by both parties when: o A guarantee exists that ensures the third party s investment will be recovered. o The third party looks to the seller rather than the property/lease to recover its investment. o The seller retains substantial risks of ownership. When the property is sold, the seller records proceeds of sale as a loan. o The interest rate to be used is that which would otherwise be negotiated for a loan under similar terms and conditions. Until the loan is paid, the seller records lease payments as revenue (even if paid directly to third party) and records as interest expense an appropriate portion of each rental payment with the remainder reducing the amount of the loan. 4 P a g e

5 Income types Initial direct costs Residual Value Capital/Finance Lease Accounting Treatment: IAS 17 Manufacturer or Dealer Finance income shall be based on a pattern reflecting a constant rate of return Profit or loss is in accordance with the policy followed by the entity for outright sales. If artificially low rates of interest are quoted, then use the market rate of interest. Profit or loss (at commencement, same as for outright sale) = PV min lease payments computed at a market rate Less: Cost or carrying value of the leased property o Less: Unguaranteed residual value Initial direct costs are included in the initial measurement of the finance lease receivable and reduce the amount of income recognised over the lease term. Reviewed regularly. If reduction in value: Change accounting using new estimate The reduction in net investment is charged to income Other Finance income shall be based on a pattern reflecting a constant rate of return Included in the initial measurement of finance lease receivable through the implicit interest rate. Reduces the amount of finance income recognized over the lease Same as manufacturer or dealer Presentation Shown as receivable equal to the net investment Same as manufacturer or dealer Disclosures In addition to IFRS 7: Same as manufacturer or dealer Reconciliation between gross investment and the PV of receivables Total contingent rents recognized as income during the period General description of leasing arrangements Gross investment and the PV of min lease payments for each period (<1 yr, 1-5 yrs, and >5 yrs) Capital/Finance Lease Accounting Treatment: ASPE Direct Financing Sales-Type Lessor Role Financial intermediate between manufacturer or dealer and a lessee Manufacturer or dealer effectively selling a product to lessee Income Types Finance income is recognized using the implicit rate after recognizing an equal amount of finance income to offset initial direct costs incurred in the period Finance Income = Total min lease payments net of any executory costs and related profit included therein; Profit or loss is recognized at time of transaction. Profit or Loss = PV of minimum lease payment net of executory costs and related profit therein; computed o Plus: Any unguaranteed residual value at the interest rate implicit in Less: cost or carrying value, if different, of leased property the lease Less: cost or carrying value, if different, of leased property Finance Income = Total min lease payments net of any executory costs and related profit included therein; o Plus: Any unguaranteed residual value Less: The aggregate present values Initial and Net of the balances: Same as Direct Financing 5 P a g e

6 Continuing Investment with Income Tax Factors: a) minimum lease payments receivable less any executory costs and related profit therein; b) the unguaranteed residual value of the lease property accruing to the lessor; c) unearned finance income, after deducting initial direct costs, remaining to be allocated to income over the lease term; d) the investment tax credit remaining to be allocated to income over the lease term; and e) future income taxes as a result of the lease, when predictable with reasonable assurance Above (w/o Tax) Same as a)-c) from above Same as Direct Financing Initial Direct Expensed as incurred and portion of unearned income is Expensed at inception of lease Costs recognized Residual Value Reviewed annually, and an upward adjustment is not made. Same as Direct Financing If decline: change accounting using new estimate reduction in net investment charged to income Presentation Net investment is shown separate from other assets. Net Same as Direct Financing investment includes: a) min. lease payments receivable less executory costs and related profit included therein; b) Plus: any unguaranteed residual value of the leased property; c) Less: unearned finance income remaining Investment tax credit is either: a) Deducted in computing the net investment; or b) Shown as deferred credit Net investment shall be segregated between current and long-term portions in a classified balance sheet Disclosures Net investment and implicit interest rate Same as Direct Financing IFRS Treatment: SALE AND LEASEBACK TRANSACTIONS A sale and leaseback transaction involves the sale of an asset and the leasing back of the same asset. The lease payment and the sale price are usually interdependent because they are negotiated as a package. 6 P a g e

7 Disclosures: Provisions of the agreement or terms of the sale and leaseback transactions ASPE Treatment: When there is interdependence between the sales and lease terms and inability to separate the sales and lease, it is a sale-leaseback transaction. Exception: When the leaseback is only a portion of the asset sold or only for a portion of the useful life (i.e. one floor of a tower, or lease is three years of a ten year useful life), it may be possible to separate the accounting aspects of the sale and the lease. Disclosure: significant guidance provided LEASE CLASSIFICATION CHANGES Lease classification made at inception of the lease Changes in estimates (economic life/residual value of leased asset) do not result in a new classification Changes in provisions, renewal/extension considered a new lease and may result in new classification ASPE: Additional guidance Point-of-view Classification Change Treatment Lessee Capital to Operating Asset and related obligation removed from books Net adjustment goes to NI for the period Lessor Sales-type/Direct financing to Operating Net investment removed from books; lease asset recorded at Lower of: Original Cost, Present FV or Present carrying amount Net adjustment goes to NI for the period IMPAIRMENT OF LEASE RECEIVABLES IAS 17: In accordance with IAS 36. ASPE 3065: Similar to ASPE 3856 If there is an indication that the lease receivables are impaired, the carrying amount is reduced (directly or by the use of an allowance account) to the highest of: (a) PV of future cash flows (discounted using current market rate of interest), (b) Amount realizable by selling the lease at the beginning of the period, (c) Amount realizable by exercising the rights to the property net of costs The impairment can be reversed in the future if conditions change up to the original carrying value. The reversal is recognized in net income in the period it occurs. IFRIC 4: DETERMINING WHETHER AN ARRANGEMENT CONTAINS A LEASE When to use IFRIC 4? When an entity enters into an arrangement of transaction(s) not in the legal form of a lease but it conveys a right to use an asset for a series of payments. (Excludes: public-to-private service concession arrangements) 7 P a g e

8 Topic A: whether the arrangement meets the definition of a lease in accordance to IAS 17 Is fulfillment of the arrangement dependent on use of specific asset(s)? t Lease Lease Does it convey right to use asset? One of: Right to operate in desired manner and control more than insignificant amount of output Right to control physical asset and controls more than insignificant amount of output Other parties cannot take more than an insignificant amount of output during term and price paid by purchaser per unit is not fixed or equal to market price Topic B: when assessment or reassessment of arrangement should be made to determine if it is a lease Assessment date should be the same as IAS 17. A reassessment after the inception of the arrangement is made only if any one of the following conditions is met (using facts as of date of assessment): There is a change in the contractual terms, unless the change only renews or extends the arrangement. A renewal option is exercised or an extension is agreed on if previously not in lease term. There is a change in the determination of whether fulfillment is dependent on a specified asset. There is a substantial change to the asset Topic C: how payments for the lease should be separated from other elements. Payments for the lease and other elements of the arrangement are to be separated on the basis of their relative fair values. The minimum lease payments for lease can be calculated by: Is it practical to separate payments for lease and other elements? Estimate lease payments with leases with comparable assets, OR Estimate other elements with comparable arrangements and deduct from total If finance Lease: recognize an asset and a liability at an amount equal to the fair value of the underlying asset. The liability is to be reduced as payments are made and an imputed finance charge on the liability recognized using the purchaser's incremental borrowing rate of interest. If operating Lease: treat all payments under the arrangement as lease payments but -disclose those payments separately from minimum lease payments of other arrangements that do not include payments for non-lease elements, and -state that the disclosed payments also include payments for non-lease elements in the arrangement. SIC 27: EVALUATING THE SUBSTANCE OF TRANSACTIONS INVOLVING THE LEGAL FORM OF A LEASE When to use: When an entity entered into a transaction or an arrangement with unrelated party/parties (an Investor) that involves the legal form of a lease, SIC 27 will provide guidance on: (a) how to determine whether a series of transactions is linked and should be accounted for as one transaction; (b) whether the arrangement meets the definition of a lease under IAS 17; and, if not, (i) whether a separate investment account and lease payment obligations that might exist represent assets and liabilities of the entity (ii) how the entity should account for other obligations resulting from the arrangement; and (iii) how the entity should account for a fee it might receive from an Investor. 8 P a g e

9 When to treat series of transactions as one transaction: Treated as one transaction when: A series of transactions that involve the legal form of a lease is linked and the overall economic effect cannot be understood without reference to the series of transactions as a whole. If one transaction: Accounting needs to reflect the substance of the arrangement and all aspects needs to be evaluated, with weight given to those aspects that have an economic effect. Indicators that individually demonstrate that an arrangement may not involve a lease under IAS 17 include: (a) entity retains all the risks and rewards incident to ownership of an underlying asset and same rights as before; (b) the primary reason is to achieve a particular tax result, and not for the right to use an asset; and (c) an option is included on terms that make its exercise almost certain. Indicators that collectively (more than one) demonstrate that a separate investment account and lease payment obligations do not meet the definitions of an asset and a liability and shall not be recognized by the Entity include: (a) entity not able to control the investment account for own objectives and not obligated to pay lease payments; (b) the entity has only a remote risk of reimbursing the entire amount of any fee received; (c) other than the initial cash flows at inception of the arrangement, the only cash flows expected under the arrangement are the lease payments that are satisfied solely from funds withdrawn from the separate investment account established with the initial cash flows. Indicators that individually demonstrate that recognition of the entire fee as income when received, if received at the beginning of the arrangement, is inappropriate include: (a) obligations either to perform or to refrain from certain significant activities are conditions of earning the fee, and therefore execution of a legally binding arrangement is not the most significant act; (b) limitations are put on the use of the asset that have the practical effect of restricting the use of the asset; (c) the possibility of reimbursing any amount the fee and paying some additional amount is not remote. The fee is to be presented in the statement of comprehensive income based on its economic substance and nature. Disclosure: An entity shall disclose the following in each period that an arrangement exists: (a) a description of the arrangement including: (i) the underlying asset and any restrictions on its use; (ii) the life and other significant terms of the arrangement; (iii) the transactions that are linked together, including any options; and (b) the accounting treatment applied to any fee received, the amount recognized as income in the period, and the line item of the statement of comprehensive income in which it is included. Each arrangement needs to be disclosed separately or in aggregate for each class of arrangement EXPOSURE DRAFT: LEASES Existing models require classification into finance or operating lease, leading to lack of comparability due to clear distinction between the two. In the future, guidance is moving towards all leases being classified as capital/finance. Main Proposal: Lessee: recognize asset representing rights to use leased term and liability to make payments. Lessor: recognize its right to receive lease payments and would either i) recognize a lease liability while continuing to recognize the underlying asset or ii) derecognize the rights in the underlying asset. Assets and liabilities are recognized as the longest possible lease term that is more likely than unlikely, using an expected outcome technique to reflect the lease payments, and updated when there are changes in facts that make it significantly different from prior period. Changes for Lessees: If they currently account for it as operating leases (recognize under the current period), they will be required to recognize the assets and liabilities under proposal. Changes for Lessor: accounting is very different - will be either derecognized or recognize asset and liability for underlying asset 9 P a g e

10 Card Question #2 & 3: ABC Corp leased a truck with an economic life of 7 years on January 1, 2010 from Truck Corp. The yearly rental is $5, due at the start of the year, for 3 years. There is no purchase option. The truck has been designed specifically for the use of the lessee. The incremental borrowing rate of the lessee is 10%, and the implicit rate of the lessor is 12%. Card Question #2: How should the lease be classified by ABC Corp (lessee) under IFRS? Test 1: Test 2: Test 3: Test 4: What is the entry to record the lease by ABC Corp (lessee) on Jan 1, 2010? Card Question #3: In addition to the facts in Card Question #2, assume that the credit risk of the lease is normal, unreimbursable costs to the lessor are $1,345 and the truck is sitting on the lessor s books at $15,000. How should Truck Corp. (lessor) classify the lease under ASPE? Test 1: Test 2: Test 3: Test 4: What are the entries to record the lease on Truck Corp. s (lessor) books? Supplementary Illustration: Using the same information as above, how would the lessee account for the lease until the second payment? (Other than initial entry) Payment *paid on Jan 1 Interest Expense Difference Obligation 1-Jan-10 $ 20, Jan-10 $5, $ - $ 5, $ 14, Dec-10 $5, $ 1, $ 3, $ 10, Dec-11 $5, $ 1, $ 4, $ 6, Dec-12 $ 7, $ $ 6, $ 0.00 January 1, 2010 Lease Obligation under Capital Lease Cash December 31, 2010 Interest Expense Lease Obligation under Capital Lease Lease Payable Depreciation Expense 4333* Acc'd Depreciation 4333* January 1, 2011 Lease Payable Cash * ($20, ) 3 year lease term = $3333 Question based on facts from Illustration 4.5 Chapter 12 of Kieso et al. (2003) Intermediate Accounting II. 10 P a g e

International Accounting Standard 17 Leases

International Accounting Standard 17 Leases International Accounting Standard 17 Leases Objective 1 The objective of this Standard is to prescribe, for lessees and lessors, the appropriate accounting policies and disclosure to apply in relation

More information

Canadian GAAP - IFRS Comparison Series Issue 8 Leases

Canadian GAAP - IFRS Comparison Series Issue 8 Leases - Comparison Series Issue 8 Leases Both and are principle-based frameworks and, from a conceptual standpoint, many of the general principles are the same. However, the application of those general principles

More information

Sri Lanka Accounting Standard LKAS 17. Leases

Sri Lanka Accounting Standard LKAS 17. Leases Sri Lanka Accounting Standard LKAS 17 Leases CONTENTS SRI LANKA ACCOUNTING STANDARD LKAS 17 LEASES paragraphs OBJECTIVE 1 SCOPE 2 3 DEFINITIONS 4 6 CLASSIFICATION OF LEASES 7 19 LEASES IN THE FINANCIAL

More information

CLASSIFICATION OF LEASES

CLASSIFICATION OF LEASES 284 Accounting Standard (AS) 19 Leases Contents OBJECTIVE SCOPE Paragraphs 1-2 DEFINITIONS 3-4 CLASSIFICATION OF LEASES 5-10 LEASES IN THE FINANCIAL STATEMENTS OF LESSEES 11-25 Finance Leases 11-22 Operating

More information

New Zealand Equivalent to International Accounting Standard 17 Leases (NZ IAS 17)

New Zealand Equivalent to International Accounting Standard 17 Leases (NZ IAS 17) New Zealand Equivalent to International Accounting Standard 17 Leases (NZ IAS 17) Issued November 2004 and incorporates amendments up to October 2010 This Standard was issued by the Financial Reporting

More information

Statement of Financial Accounting Standards No. 13

Statement of Financial Accounting Standards No. 13 Statement of Financial Accounting Standards No. 13 FAS13 Status Page FAS13 Summary Accounting for Leases November 1976 Financial Accounting Standards Board of the Financial Accounting Foundation 401 MERRITT

More information

IPSAS 13 - LEASES as adopted by the Maltese Government

IPSAS 13 - LEASES as adopted by the Maltese Government IPS IPSAS 13 - LEASES as adopted by the Maltese Government Issued DD/MM/YY This Standard was issued by the IPSAS Implementation Board pursuant to section X of the X Act 201X IPSAS 13 - LEASES as adopted

More information

PRACTICAL GUIDE IAS 17: LEASES

PRACTICAL GUIDE IAS 17: LEASES PRACTICAL GUIDE IAS 17: LEASES www.consultasifrs.com/uk 2014 www.consultasifrs.com 1 ConsultasIFRS is an online firm specialized in advisory on IFRS. PRACTICAL GUIDE IAS 17 Leases Our only goal is to exceed

More information

IPSAS 13 LEASES Acknowledgment

IPSAS 13 LEASES Acknowledgment IPSAS 13 LEASES Acknowledgment This International Public Sector Accounting Standard is drawn primarily from International Accounting Standard (IAS) 17 (revised 2003), Leases published by the International

More information

LEASES: ASPE 3065. PMR NOTES HTK Consulting

LEASES: ASPE 3065. PMR NOTES HTK Consulting LEASES: ASPE 3065 Scope The following items are not covered under this section: licensing agreements for items such as motion pictures, videotapes, plays, manuscripts, patents and copyrights Definitions

More information

IPSAS 13 LEASES Acknowledgment

IPSAS 13 LEASES Acknowledgment IPSAS 13 LEASES Acknowledgment This International Public Sector Accounting Standard (IPSAS) is drawn primarily from International Accounting Standard (IAS) 17 (Revised 2003), Leases, published by the International

More information

LEASES: IAS 17. PMR NOTES HTK Consulting

LEASES: IAS 17. PMR NOTES HTK Consulting LEASES: IAS 17 Scope This section does not apply to the following: Investment properties held by lessees (finance or operating) that are accounted for as an investment property (see IAS 40) Investment

More information

ACCOUNTING FOR LEASES AND HIRE PURCHASE CONTRACTS

ACCOUNTING FOR LEASES AND HIRE PURCHASE CONTRACTS Issued 07/85 Revised 06/90 New Zealand Society of Accountants STATEMENT OF STANDARD ACCOUNTING PRACTICE NO. 18 Revised 1990 ACCOUNTING FOR LEASES AND HIRE PURCHASE CONTRACTS Issued by the Council, New

More information

IAS 17. IAS 17 definition Benefits of leases. Leases

IAS 17. IAS 17 definition Benefits of leases. Leases by Juma Kisaame, 2014 (http://practicalaction.org/microleasing/docs/dfcu.pdf) 2015-04-29 IAS 17 Leases IAS 17 definition Lessor = OWNER of property A lease is an agreement whereby the lessor conveys to

More information

HKAS 17 Revised July 2012February 2014. Hong Kong Accounting Standard 17. Leases

HKAS 17 Revised July 2012February 2014. Hong Kong Accounting Standard 17. Leases HKAS 17 Revised July 2012February 2014 Hong Kong Accounting Standard 17 Leases HKAS 17 COPYRIGHT Copyright 2014 Hong Kong Institute of Certified Public Accountants This Hong Kong Financial Reporting Standard

More information

Leases Learning Objectives. Overview of Leasing. Advantages of Leasing

Leases Learning Objectives. Overview of Leasing. Advantages of Leasing Leases Learning Objectives 1. Describe the characteristics and advantages of leases 2. Operating leases vs Captial leases 3. Determine rental payments 4. Account for operating leases - lessee 5. Account

More information

ACCOUNTING POLICY LEASES

ACCOUNTING POLICY LEASES ACCOUNTING POLICY LEASES Responsible Officer Contact Officer Review Director, Corporate Finance Senior Group Statutory Reporting Manager, Corporate Finance Every year File Number 2010/02660 Associated

More information

ACCOUNTING FOR LEASES - COMPARISON OF INDIAN ACCOUNTING STANDARD AND US GAAP

ACCOUNTING FOR LEASES - COMPARISON OF INDIAN ACCOUNTING STANDARD AND US GAAP D.S.RAWAT FCA ACCOUNTING FOR LEASES - COMPARISON OF INDIAN ACCOUNTING STANDARD AND US GAAP The comparison of lease accounting as per the Indian GAAP (AS-19) US GAAP SFAS-13 is based on (1) The similarities

More information

finreporting.com free online financial services

finreporting.com free online financial services LEASE ACCOUNTING -LESSEE POLICY PERSPECTIVE A Lease is defined as an agreement conveying the right to use property, plant, or equipment (land and/or depreciable assets) for a stated period of time. This

More information

IF THE LEASE MEETS ONE OR MORE OF THE FOLLOWING FOUR CRITERIA, THE LESSEE MUST CLASSIFY AND ACCOUNT FOR THE ARRANGEMENT AS A CAPITAL LEASE:

IF THE LEASE MEETS ONE OR MORE OF THE FOLLOWING FOUR CRITERIA, THE LESSEE MUST CLASSIFY AND ACCOUNT FOR THE ARRANGEMENT AS A CAPITAL LEASE: ILLUSTRATION 22-1 LESSEE'S CAPITALIZATION CRITERIA IF THE LEASE MEETS ONE OR MORE OF THE FOLLOWING FOUR CRITERIA, THE LESSEE MUST CLASSIFY AND ACCOUNT FOR THE ARRANGEMENT AS A CAPITAL LEASE: 1. THE LEASE

More information

Practical Workshop for NBU Staff. Gilbert Gélard. Consultant, former IASB member November 17, 2015

Practical Workshop for NBU Staff. Gilbert Gélard. Consultant, former IASB member November 17, 2015 Practical Workshop for NBU Staff Gilbert Gélard Consultant, former IASB member November 17, 2015 »Finance leases are accounted for in a similar manner to: 1. Credit transactions 2. Cash transactions 3.

More information

January 2016. International Financial Reporting Standard. IFRS 16 Leases

January 2016. International Financial Reporting Standard. IFRS 16 Leases January 2016 International Financial Reporting Standard IFRS 16 Leases International Financial Reporting Standard 16 Leases IFRS 16 Leases is issued by the International Accounting Standards Board (IASB).

More information

IAS - 17. Leases. By: http://www.worldgaapinfo.com

IAS - 17. Leases. By: http://www.worldgaapinfo.com IAS - 17 Leases International Accounting Standard No 17 (IAS 17) Leases This revised standard replaces IAS 17 (revised 1997) Leases, and will apply for annual periods beginning on or after January 1, 2005.

More information

International Accounting Standard 17 (IAS 17): Leases

International Accounting Standard 17 (IAS 17): Leases International Accounting Standard 17 (IAS 17): Leases By PAUL YOUNG, CGA This article is part of a series on International Financial Reporting Standards published on PD Net. Introduction Accounting for

More information

I. GENERAL PROVISIONS KEY DEFINITIONS

I. GENERAL PROVISIONS KEY DEFINITIONS APPROVED by Resolution No. 1 of 18 December 2003 of the Standards Board of the Public Establishment the Institute of Accounting of the Republic of Lithuania 20 BUSINESS ACCOUNTING STANDARD OPERATING LEASE,

More information

PREVIEW OF CHAPTER 21-1. Intermediate Accounting 15th Edition Kieso Weygandt Warfield

PREVIEW OF CHAPTER 21-1. Intermediate Accounting 15th Edition Kieso Weygandt Warfield PREVIEW OF CHAPTER 21 21-1 Intermediate Accounting 15th Edition Kieso Weygandt Warfield 21 Accounting for Leases LEARNING OBJECTIVES After studying this chapter, you should be able to: 21-2 1. Explain

More information

TREASURER S DIRECTIONS ACCOUNTING LIABILITIES Section A3.6 : Leases

TREASURER S DIRECTIONS ACCOUNTING LIABILITIES Section A3.6 : Leases TREASURER S DIRECTIONS ACCOUNTING LIABILITIES Section A3.6 : Leases STATEMENT OF INTENT Assets required by Agencies to deliver outputs can be obtained by purchase or by lease. This Section provides the

More information

Universal Weather and Aviation. Capital Lease Policy #2-3.0016

Universal Weather and Aviation. Capital Lease Policy #2-3.0016 Universal Weather and Aviation Capital Lease Policy #2-3.0016 Approved on: November 3, 2010 Table of Contents Policy... 1 1.0 Purpose... 1 2.0 Scope... 1 3.0 Responsibility... 1 4.0 Policy... 1 4.1 Leases...

More information

NEED TO KNOW. Leases The 2013 Exposure Draft

NEED TO KNOW. Leases The 2013 Exposure Draft NEED TO KNOW Leases The 2013 Exposure Draft 2 LEASES - THE 2013 EXPOSURE DRAFT TABLE OF CONTENTS Introduction 3 Existing guidance and the rationale for change 4 The IASB/FASB project to date 5 The main

More information

technical factsheet 183 Leases

technical factsheet 183 Leases technical factsheet 183 Leases CONTENTS Page 1 Introduction 1 2 Legislative requirement 1 3 Accounting standards 2 4 Examples 6 5 Checklist 8 6 Sources of information 11 This technical factsheet is for

More information

Interest Expense Principal

Interest Expense Principal ACCOUNTING BY THE LESSOR AND LESSEE A lease is a contract between a lessor (the owner of the property) and a lessee (the user of the property). Normally the lessee makes periodic payments in exchange for

More information

Accounting standard study group

Accounting standard study group Accounting standard study group CIMA Sri Lanka division Objective: Prescribe for lessees and lessors, the appropriate accounting policies and disclosure to apply in relation to finance and operating leases.

More information

LEASES ACCOUNTING PROCEDURE

LEASES ACCOUNTING PROCEDURE AMINISTRATIVE 5 FINANCE AN RESOURCES NUMBER 048 Policy atabase ocument Reference Number 5048 LEASES ACCOUNTING PROCEURE Parent Policy Title Financial Accounting Policy Associated ocuments Preamble None

More information

Summary of IFRS Exposure Draft Leases

Summary of IFRS Exposure Draft Leases April 2014 The International Accounting Standards Board (IASB) recently issued a revised Exposure Draft (ED) relating to leases. Once these proposals are finalized the new guidance will replace IAS 17

More information

1. The purpose of this paper is to discuss disclosure requirements for a lessor in the final leases standard.

1. The purpose of this paper is to discuss disclosure requirements for a lessor in the final leases standard. IASB Agenda ref 3B STAFF PAPER July 2014 REG FASB IASB Meeting Project Paper topic Leases Lessor disclosure requirements CONTACT(S) Roberta Ravelli rravelli@ifrs.org +44 (0) 20 7246 6935 Scott A. Muir

More information

LEASE ACCOUNTING FOR STATE & LOCAL GOVERNMENTS

LEASE ACCOUNTING FOR STATE & LOCAL GOVERNMENTS LEASE ACCOUNTING FOR STATE & LOCAL GOVERNMENTS April 7, 2015 Overview of GASB s Reexamination of Lease Accounting Guidance Andy Richards, CPA Partner arichards@bkd.com 1 TO RECEIVE CPE CREDIT Participate

More information

Leases (Topic 840) Proposed Accounting Standards Update. Issued: August 17, 2010 Comments Due: December 15, 2010

Leases (Topic 840) Proposed Accounting Standards Update. Issued: August 17, 2010 Comments Due: December 15, 2010 Proposed Accounting Standards Update Issued: August 17, 2010 Comments Due: December 15, 2010 Leases (Topic 840) This Exposure Draft of a proposed Accounting Standards Update of Topic 840 is issued by the

More information

CHAPTER 21. Accounting for Leases ASSIGNMENT CLASSIFICATION TABLE

CHAPTER 21. Accounting for Leases ASSIGNMENT CLASSIFICATION TABLE CHAPTER 21 Accounting for Leases ASSIGNMENT CLASSIFICATION TABLE Topics Questions Brief Exercises Exercises Problems Cases *1. Rationale for leasing. 1, 2, 4 1, 2 *2. Lessees; classification of leases;

More information

Chapter 14. Leases: Lessor Accounting. 2. Definitions 432. 3. Finance leases 433. 3.1 Overview: recognition and measurement 433. 3.

Chapter 14. Leases: Lessor Accounting. 2. Definitions 432. 3. Finance leases 433. 3.1 Overview: recognition and measurement 433. 3. Leases: Lessor Accounting Reference: IAS 17 Contents: 1. Introduction Page 432 2. Definitions 432 3. Finance leases 433 3.1 Overview: recognition and measurement 433 3.2 Disclosure 433 3.3 If the lessor

More information

Page 1. LKAS 17 -Leases. Nirmal Costa Director -Financial Accounting Advisory Services Ernst & Young. 10 th July 2012. Page 2

Page 1. LKAS 17 -Leases. Nirmal Costa Director -Financial Accounting Advisory Services Ernst & Young. 10 th July 2012. Page 2 Page 1 LKAS 17 -Leases Nirmal Costa Director -Financial Accounting Advisory Services Ernst & Young 10 th July 2012 Page 2 What is a lease? 'an agreement whereby the lessor conveys to the lessee in return

More information

This policy sets forth system-wide standards for financial accounting and reporting of leases.

This policy sets forth system-wide standards for financial accounting and reporting of leases. Accounting for Leases Section: Accounting and Financial Reporting Title: Accounting for Leases Number: 05.281 Index POLICY.100 POLICY STATEMENT.110 POLICY RATIONALE.120 AUTHORITY.130 APPROVAL AND EFFECTIVE

More information

Chapter. Accounting for Leases. Learning objectives. 10.1 Introduction to accounting for leases

Chapter. Accounting for Leases. Learning objectives. 10.1 Introduction to accounting for leases Chapter 10 Accounting for Leases Learning objectives Upon completing this chapter readers should: LO1 understand what a lease represents; LO2 understand the differences between operating leases and financial

More information

The Basics of Lease Accounting

The Basics of Lease Accounting The Basics of Lease Accounting Joe Sebik, VP - Global Originations & Structuring J. P. Morgan Leasing, Inc. (212) 899-1249 joseph.p.sebik@jpmorgan.com Howard Thompson, Director - Pricing & Economics Key

More information

NEED TO KNOW. Leases A Project Update

NEED TO KNOW. Leases A Project Update NEED TO KNOW Leases A Project Update 2 LEASES - A PROJECT UPDATE TABLE OF CONTENTS Introduction 3 Existing guidance and the rationale for change 4 The IASB/FASB project to date 5 The main proposals 6 Definition

More information

Advanced Accounting 515-44B Leases Review Page 1

Advanced Accounting 515-44B Leases Review Page 1 Advanced Accounting 515-44B Leases Review Page 1 LEASES REVIEW I. LEASE DEFINITIONS: a. Lease term: The fixed noncancelable portion of the lease plus all renewal terms that are reasonably expected to be

More information

BECKER GEARTY CONTINUING PROFESSIONAL EDUCATION

BECKER GEARTY CONTINUING PROFESSIONAL EDUCATION Now & Next 973.822.2220 (ASC 840 f/k/asfas 13) Learning Objectives: To review recent developments in lease accounting and demonstrate how they have affected accounting for leases as prescribed under SFAS

More information

Insights into IFRS Lease Accounting

Insights into IFRS Lease Accounting Insights into Accountants Group in Germany 54th AGiG Seminar 7 November 2006 WP StB CPA Karsten Ganssauge PwC International Reporting Group PwC Agenda US-GAAP Lease Accounting German GAAP Lease Accounting

More information

The leasing standard. A comprehensive look at the new model and its impact. At a glance. Background. Key provisions. Definition and scope

The leasing standard. A comprehensive look at the new model and its impact. At a glance. Background. Key provisions. Definition and scope No. US2016-02 March 02, 2016 What s inside: Background... 1 Key provisions... 1 Definition and scope... 1 Contract consideration and allocation... 4 Lessee accounting model... 5 Lessor accounting model...

More information

Lease accounting update

Lease accounting update Financial Executives International 22 March 2012 Agenda Where are we now? Timing? What are the proposed changes to lease accounting? Overview of implications and considerations What are companies doing

More information

Characteristics of Leases

Characteristics of Leases A lease is a contract in which the owner of an asset (the lessor) conveys to another party (the lessee) the right to use that asset. Characteristics of Leases The right to use the lessor s asset is granted

More information

HKFRS / IFRS UPDATE 2013/09

HKFRS / IFRS UPDATE 2013/09 ISSUE 2013/09 AUGUST 2013 WWW.BDO.COM.HK s HKFRS / IFRS UPDATE 2013/09 Summary The International Accounting Standards Board (IASB) has issued Exposure Draft 2013/06 Leases (the ED) for public comment,

More information

Short term leases, defined as a lease term of one year or less, are to be accounted for under the same operating lease method that currently exists.

Short term leases, defined as a lease term of one year or less, are to be accounted for under the same operating lease method that currently exists. Lease Accounting Updated January 2014 Page 1 Lease Accounting The pending changes in lease accounting have been a hot topic item since 2009, when the Financial Accounting Standards Board (FASB) and International

More information

Accounting Guideline

Accounting Guideline Accounting Guideline GAP 13 Leases All rights reserved. No part of this publication may be reproduced, stored in retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying,

More information

CHAPTER 20 LEASES. MULTIPLE CHOICE Conceptual

CHAPTER 20 LEASES. MULTIPLE CHOICE Conceptual CHAPTER 20 LEASES MULTIPLE CHOICE Conceptual Answer No. Description b 1. Essential element of a lease agreement. c 2. Identification of executory costs. d 3. Advantages of leasing. b 4. Current standards

More information

Student Learning Outcomes

Student Learning Outcomes Chapter 15 Leases Part 2: Capital Leases Intermediate Accounting II Dr. Chula King Student Learning Outcomes Explain and use the criteria for determining whether a lease is capital or not Describe and

More information

IFRS for SMEs (2009) + Q&As. IFRS Foundation: Training Material for the IFRS for SMEs. Module 20 Leases

IFRS for SMEs (2009) + Q&As. IFRS Foundation: Training Material for the IFRS for SMEs. Module 20 Leases IFRS for SMEs (2009) + Q&As IFRS Foundation: Training Material for the IFRS for SMEs Module 20 Leases IFRS Foundation: Training Material for the IFRS for SMEs including the full text of Section 20 Leases

More information

August 2010. Leases. Comments to be received by 15 December 2010

August 2010. Leases. Comments to be received by 15 December 2010 August 2010 Exposure Draft ED/2010/9 Leases Comments to be received by 15 December 2010 Exposure Draft Leases Comments to be received by 15 December 2010 ED/2010/9 This exposure draft Leases is published

More information

Mary Kelly, BBS, FCCA. Martin Kelly, BSc (Econ) Hons, DIP.Acc, FCA, MBA, MCMI.

Mary Kelly, BBS, FCCA. Martin Kelly, BSc (Econ) Hons, DIP.Acc, FCA, MBA, MCMI. Article: Accounting for Leases - IAS 17 Leases By: Mary Kelly, BBS, FCCA. Martin Kelly, BSc (Econ) Hons, DIP.Acc, FCA, MBA, MCMI. Examiner: Professional 1 Corporate Reporting Introduction IAS 17 Leases

More information

INDONESIAN INSTITUTE OF ACCOUNTANTS ACCOUNTING FOR LEASES

INDONESIAN INSTITUTE OF ACCOUNTANTS ACCOUNTING FOR LEASES STATEMENT OF FINANCIAL ACCOUNTING STANDARD SFAS No. 30 INDONESIAN INSTITUTE OF ACCOUNTANTS ACCOUNTING FOR LEASES CONTENTS paragraphs INTRODUCTION... 01-11 Background... 01-08 Type of Leases... 09 Execution

More information

May 2013. Leases. Comments to be received by 13 September 2013

May 2013. Leases. Comments to be received by 13 September 2013 May 2013 Exposure Draft ED/2013/6 Leases Comments to be received by 13 September 2013 Exposure Draft Leases Comments to be received by 13 September 2013 Exposure Draft ED/2013/6 Leases is published by

More information

Proposed Lease Accounting Changes: Impact on Asset Finance Deals

Proposed Lease Accounting Changes: Impact on Asset Finance Deals Proposed Lease Accounting Changes: Impact on Asset Finance Deals In August 2010, the International Accounting Standards Board ( IASB ) issued a proposal which, if adopted, will overhaul lease accounting

More information

ACCOUNTING BY THE LESSEE

ACCOUNTING BY THE LESSEE Chapter 21 Accounting for Leases 21 1 CHAPTER 21 ACCOUNTING FOR LEASES This IFRS Supplement provides expanded discussions of accounting guidance under International Financial Reporting Standards (IFRS)

More information

New Developments Summary

New Developments Summary March 1, 2016 NDS 2016-02 New Developments Summary FASB issues new lease accounting standard Long-awaited guidance brings most leases on balance sheet for lessees Overview On February 25, the FASB released

More information

Accounting for Leases

Accounting for Leases CHAPTER 21 O BJECTIVES After reading this chapter, you will be able to: 1 Explain the advantages of leasing. 2 Understand key terms related to leasing. 3 Explain how to classify leases of personal property.

More information

418 Chapter 13 Leases

418 Chapter 13 Leases CHAPTER 13 Leases Business firms generally acquire property rights in long-term assets through purchases that are funded by internal sources or by externally borrowed funds. The accounting issues associated

More information

A finance lease gives rise to depreciation expense for depreciable assets as well as a finance expense for each reporting period.

A finance lease gives rise to depreciation expense for depreciable assets as well as a finance expense for each reporting period. LEASING ARRANGEMENTS UNSW Accounting Procedure Linked UNSW Policy Responsible Officer Contact Officer Review Every year Effective Date 31 December 2013 Leases Director, Corporate Finance and Advisory Services

More information

Defining Issues. FASB and IASB Take Divergent Paths on Key Aspects of Lease Accounting. March 2014, No. 14-17. Key Facts

Defining Issues. FASB and IASB Take Divergent Paths on Key Aspects of Lease Accounting. March 2014, No. 14-17. Key Facts Defining Issues March 2014, No. 14-17 FASB and IASB Take Divergent Paths on Key Aspects of Lease Accounting At their March 18-19 meeting to redeliberate the proposals in their 2013 exposure drafts (EDs)

More information

Financial Accounting: Liabilities & Equities Class notes Barbara Wyntjes, B.Sc., CGA

Financial Accounting: Liabilities & Equities Class notes Barbara Wyntjes, B.Sc., CGA Module 5: Leases Part 2: Assignment 17-1 (Chapter 17, page 1080) The lease term is eight years. Guaranteed residual value, none. Unguaranteed residual value, unknown BPO, none. Minimum net lease payment,

More information

Summary of Certain Differences between SFRS and US GAAP

Summary of Certain Differences between SFRS and US GAAP Summary of Certain Differences between and SUMMARY OF CERTAIN DIFFERENCES BETWEEN AND The combined financial statements and the pro forma consolidated financial information of our Group included in this

More information

Intermediate Accounting

Intermediate Accounting Intermediate Accounting Thomas H. Beechy Schulich School of Business, York University Joan E. D. Conrod Faculty of Management, Dalhousie University PowerPoint slides by: Bruce W. MacLean, Faculty of Management,

More information

AFM 391 Case Concepts

AFM 391 Case Concepts AFM 391 Case Concepts a. Why do companies lease assets rather than buy them? 1. 100% financing at fixed rates. Leases are often signed without requiring any money down from the lessee, which helps to conserve

More information

Final standard on leases is taking shape

Final standard on leases is taking shape No. 2015-02 25 March 2015 Technical Line FASB proposed guidance Final standard on leases is taking shape The new standard could affect companies decisions about whether to lease or buy assets. What you

More information

Lessor Example Derecognition Approach

Lessor Example Derecognition Approach Lessor Example Derecognition Approach **Disclaimer The exposure draft received nearly 700 letters of comment through the comment period ended December 15, 2010. There is some expectation that key features

More information

Depreciation is the systematic allocation of the depreciable amount of an asset over its useful life.

Depreciation is the systematic allocation of the depreciable amount of an asset over its useful life. International Accounting Standard 16 Property, Plant and Equipment Objective 1 The objective of this Standard is to prescribe the accounting treatment for property, plant and equipment so that users of

More information

International Accounting Standard 40 Investment Property

International Accounting Standard 40 Investment Property International Accounting Standard 40 Investment Property Objective 1 The objective of this Standard is to prescribe the accounting treatment for investment property and related disclosure requirements.

More information

Accounting Practitioners Guide For Renewable Energy Projects

Accounting Practitioners Guide For Renewable Energy Projects Clean Energy Forum: Financing and Regulatory Compliance Accounting Practitioners Guide For Renewable Energy Projects Richard A. Cleaveland CPA Partner The material contained in this presentation is for

More information

Accounting and Reporting Policy FRS 102. Staff Education Note 6 Leases

Accounting and Reporting Policy FRS 102. Staff Education Note 6 Leases Accounting and Reporting Policy FRS 102 Staff Education Note 6 Leases Disclaimer This Education Note has been prepared by FRC staff for the convenience of users of FRS 102 The Financial Reporting Standard

More information

Adapted, with permission, from The Canadian Institute of Chartered Accountants, Toronto, Canada, October, 1998.

Adapted, with permission, from The Canadian Institute of Chartered Accountants, Toronto, Canada, October, 1998. Introduction to LEASING Adapted, with permission, from The Canadian Institute of Chartered Accountants, Toronto, Canada, October, 1998. COMMON LEASING TERMS The following list comprises some standard definitions

More information

Residual Values Accounting for Exchanges of Risk and Value

Residual Values Accounting for Exchanges of Risk and Value Residual Values Accounting for Exchanges of Risk and Value Conservatism must be your guide. Equipment ownership is a hallmark of equipment leasing that sets it apart from other types of financing transactions.

More information

Accounting for Long-term Assets,

Accounting for Long-term Assets, 1 Accounting for Long-term Assets, Long-term Debt and Leases TABLE OF CONTENTS Introduction 2 Long-term Assets 2 Acquiring or creating 2 Tangible assets 2 Intangible assets 3 Depreciating, amortizing and

More information

Project: Leases--Preliminary Views March 2009 Reference Number: DP/2009/1

Project: Leases--Preliminary Views March 2009 Reference Number: DP/2009/1 abr/rev/dtcommentletter.rtf From: Professor Richard Macve, FCA, Hon FIA, Professor of Accounting Department of Accounting (E306) London School of Economics Houghton Street, Aldwych, London WC2A 2AE UK

More information

Understanding the Changes to Lease Accounting and What You Should Do Now!

Understanding the Changes to Lease Accounting and What You Should Do Now! Understanding the Changes to Lease Accounting and What You Should Do Now! Shane Gastecki, Audit Manager Brian Matthews, Audit Manager June 29, 2016 Today s Agenda Overview and Background Scope and Definition

More information

Accounting for Leases

Accounting for Leases Accounting for Leases Accounting for Leases Copyright 2014 by DELTACPE LLC All rights reserved. No part of this course may be reproduced in any form or by any means, without permission in writing from

More information

Effects analysis for leases (IASB-only) 1. Summary. Changes being proposed to the accounting requirements. Page 1 of 34

Effects analysis for leases (IASB-only) 1. Summary. Changes being proposed to the accounting requirements. Page 1 of 34 Effects analysis for leases (IASB-only) 1 BC329 The IASB is committed to assessing and sharing knowledge about the likely costs of implementing proposed new requirements and the likely ongoing associated

More information

FASB-IASB Lease Project Update Interpreting latest revised proposal as conclusion nears

FASB-IASB Lease Project Update Interpreting latest revised proposal as conclusion nears FASB-IASB Lease Project Update Interpreting latest revised proposal as conclusion nears Wednesday, June 19th at 2PM EDT Dial-in Info: 1-855-235-8283 Conference ID 76111778 Thanks for joining us! The webinar

More information

SAMPLE MANUFACTURING COMPANY LIMITED CONSOLIDATED FINANCIAL STATEMENTS. Year ended December 31, 2011

SAMPLE MANUFACTURING COMPANY LIMITED CONSOLIDATED FINANCIAL STATEMENTS. Year ended December 31, 2011 SAMPLE MANUFACTURING COMPANY LIMITED CONSOLIDATED FINANCIAL STATEMENTS Year ended SAMPLE MANUFACTURING COMPANY LIMITED CONSOLIDATED FINANCIAL STATEMENTS For the year ended The information contained in

More information

PKF International Limited administers a network of legally independent member firms which carry on separate businesses under the PKF Name.

PKF International Limited administers a network of legally independent member firms which carry on separate businesses under the PKF Name. IFRS Summary 2010 PKF International Limited administers a network of legally independent member firms which carry on separate businesses under the PKF Name. PKF International Limited is not responsible

More information

IPSAS 29 FINANCIAL INSTRUMENTS: RECOGNITION AND MEASUREMENT

IPSAS 29 FINANCIAL INSTRUMENTS: RECOGNITION AND MEASUREMENT IPSAS 29 FINANCIAL INSTRUMENTS: RECOGNITION AND MEASUREMENT Acknowledgment This International Public Sector Accounting Standard (IPSAS) is drawn primarily from International Accounting Standard (IAS) 39,

More information

Accounting for Leases

Accounting for Leases Accounting for Leases Trevor Farber tfarber@deloitte.com Taylor Paul tapaul@deloitte.com Deloitte & Touche LLP Session Agenda Lease accounting update Energy contract case studies involving: - Leases -

More information

Comments on the Exposure Draft Lease

Comments on the Exposure Draft Lease Comments on the Exposure Draft Lease By China Banking Association SUMMARY: Although the purpose of this EXPOSURE DRAFT is to provide more complete information to the public and eliminate the room for off

More information

Investment Property. Indian Accounting Standard (Ind AS) 40. Investment Property

Investment Property. Indian Accounting Standard (Ind AS) 40. Investment Property Investment Property Indian Accounting Standard (Ind AS) 40 Investment Property Contents Paragraphs OBJECTIVE 1 SCOPE 2 4 DEFINITIONS 5 15 RECOGNITION 16 19 MEASUREMENT AT RECOGNITION 20-29 MEASUREMENT

More information

Indian Accounting Standard (Ind AS) 40 Investment Property

Indian Accounting Standard (Ind AS) 40 Investment Property Indian Accounting Standard (Ind AS) 40 Investment Property Contents Paragraphs OBJECTIVE 1 SCOPE 2 4 DEFINITIONS 5 15 RECOGNITION 16 19 MEASUREMENT AT RECOGNITION 20-29 MEASUREMENT AFTER RECOGNITION 30-56

More information

Tax Implications of Significant PFRS Standards

Tax Implications of Significant PFRS Standards Tax Implications of Significant PFRS Standards Ma. Victoria C. Españo PICPA National Annual Convention Iloilo City, 2010 PFRS and Tax Laws Philippine Financial Reporting Standards (PFRS) set of rules to

More information

Proposed Lease Accounting For Lessees Stuart Shough, University of South Carolina Upstate, USA

Proposed Lease Accounting For Lessees Stuart Shough, University of South Carolina Upstate, USA Proposed Lease Accounting For Lessees Stuart Shough, University of South Carolina Upstate, USA ABSTRACT On August 17, 2010, the Financial Accounting Standards Board and the International Accounting Standards

More information

NEPAL ACCOUNTING STANDARDS ON INVESTMENT PROPERTY

NEPAL ACCOUNTING STANDARDS ON INVESTMENT PROPERTY NAS 19 NEPAL ACCOUNTING STANDARDS ON INVESTMENT PROPERTY CONTENTS Paragraphs OBJECTIVE 1 SCOPE 2-5 DEFINITIONS 6-16 RECOGNITION 17-20 MEASUREMENT AT RECOGNITION 21-30 MEASUREMENT AFTER RECOGNITION 31-57

More information

B EXERCISES E21-1B (Lessee Entries; Capital Lease with Unguaranteed Residual Value) Instructions (a) (b) (c)

B EXERCISES E21-1B (Lessee Entries; Capital Lease with Unguaranteed Residual Value) Instructions (a) (b) (c) B EXERCISES E1-1B (Lessee Entries; Capital Lease with Unguaranteed Residual Value) On January 1, 014, Manor Inc. signed a 6-year noncancelable lease for a printing press. The terms of the lease called

More information

NEPAL ACCOUNTING STANDARDS ON PROPERTY, PLANT AND EQUIPMENT

NEPAL ACCOUNTING STANDARDS ON PROPERTY, PLANT AND EQUIPMENT NAS 06 NEPAL ACCOUNTING STANDARDS ON PROPERTY, PLANT AND EQUIPMENT CONTENTS Paragraphs OBJECTIVE 1 SCOPE 2-5 DEFINITIONS 6 RECOGNITION 7 14 Initial cost 11 Subsequent cost 12-14 MEASUREMENT AT RECOGNITION

More information

G8 Education Limited ABN: 95 123 828 553. Accounting Policies

G8 Education Limited ABN: 95 123 828 553. Accounting Policies G8 Education Limited ABN: 95 123 828 553 Accounting Policies Table of Contents Note 1: Summary of significant accounting policies... 3 (a) Basis of preparation... 3 (b) Principles of consolidation... 3

More information

Intangible assets other than Goodwill, Business combinations and Goodwill

Intangible assets other than Goodwill, Business combinations and Goodwill Intangible assets other than Goodwill, Business combinations and Goodwill 1.1. Recognition An entity shall apply the recognition criteria stated in Section Concepts and Principles of IFRS for SMEs for

More information