07-18-2014, 01:58 PM
Leases in the financial statements of lessees
Operating Leases
Lease payments under an operating lease shall be recognised as an expense on a straight-line basis over the
lease term unless another systematic basis is more representative of the time pattern of the user’s benefit.
Finance Leases
At the commencement of the lease term, lessees shall recognise finance leases as assets and liabilities in their
statements of financial position at amounts equal to the fair value of the leased property or, if lower, the
present value of the minimum lease payments, each determined at the inception of the lease. The discount rate
to be used in calculating the present value of the minimum lease payments is the interest rate implicit in the
lease, if this is practicable to determine; if not, the lessee’s incremental borrowing rate shall be used. Any
initial direct costs of the lessee are added to the amount recognised as an asset.
Operating Leases
Lease payments under an operating lease shall be recognised as an expense on a straight-line basis over the
lease term unless another systematic basis is more representative of the time pattern of the user’s benefit.
Finance Leases
At the commencement of the lease term, lessees shall recognise finance leases as assets and liabilities in their
statements of financial position at amounts equal to the fair value of the leased property or, if lower, the
present value of the minimum lease payments, each determined at the inception of the lease. The discount rate
to be used in calculating the present value of the minimum lease payments is the interest rate implicit in the
lease, if this is practicable to determine; if not, the lessee’s incremental borrowing rate shall be used. Any
initial direct costs of the lessee are added to the amount recognised as an asset.
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