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    Leases: Section 15

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    Chara etang
    A lease is an agreement where the lessor conveys to the lessee the right to use an asset for an agreed period of time in return for payment. There are two types of leases: finance leases and operating leases. Finance leases transfer substantially all the risks and rewards of ownership, while operating leases do not. The document then provides guidance on the initial measurement, subsequent measurement, sale and leaseback transactions, and derecognition for lessees and lessors under different accounting frameworks.

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    Leases: Section 15

    Uploaded by

    Chara etang
    32 views9 pages
    A lease is an agreement where the lessor conveys to the lessee the right to use an asset for an agreed period of time in return for payment. There are two types of leases: finance leases and operating leases. Finance leases transfer substantially all the risks and rewards of ownership, while operating leases do not. The document then provides guidance on the initial measurement, subsequent measurement, sale and leaseback transactions, and derecognition for lessees and lessors under different accounting frameworks.

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    Leases

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    A lease is an agreement where the lessor conveys to the lessee the right to use an asset for an agreed period of time in return for payment. There are two types of leases: finance leases and operating leases. Finance leases transfer substantially all the risks and rewards of ownership, while operating leases do not. The document then provides guidance on the initial measurement, subsequent measurement, sale and leaseback transactions, and derecognition for lessees and lessors under different accounting frameworks.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    32 views9 pages

    Leases: Section 15

    Uploaded by

    Chara etang
    A lease is an agreement where the lessor conveys to the lessee the right to use an asset for an agreed period of time in return for payment. There are two types of leases: finance leases and operating leases. Finance leases transfer substantially all the risks and rewards of ownership, while operating leases do not. The document then provides guidance on the initial measurement, subsequent measurement, sale and leaseback transactions, and derecognition for lessees and lessors under different accounting frameworks.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 9

    Section 15

    LEASES

    Prepared by:
    Segura, Meryl
    Senon, Jhoniza
    Somogod, Ma. Sophia
    Lease is an agreement
    whereby the lessor
    conveys to the lessee in
    return for payment or a
    series of payments the A finance lease transfers

    right to use an asset for an substantially all the risks

    agreed period of time. and rewards incidental to


    ownership. An operating
    lease does not.
    INITIAL MEASUREMENT - LESSEE
    Full PFRS PFRS for SMEs PFRS for Small Entities
    • Finance Lease – lower • Finance Lease – lower • Operating Lease –
    between fair value of between fair value of No distinction
    the asset or the present the asset or the present between operating
    value of the minimum
    value of the minimum and finance lease.
    lease payments.
    lease payments. Recognize as
    • Operating Lease –
    • Operating Lease – includes additional expense in profit or
    expensed on a straight- guidance on the loss
    line basis over the lease treatment of an
    term unless another operating lease by a
    systematic basis is more lessee, where
    representative of the payments payable to
    use of the asset. the lessor are
    structured to increase
    with inflation.
    INITIAL MEASUREMENT - LESSOR
    Full PFRS PFRS for SMEs PFRS for Small Entities
    • Finance Lease – • Finance Lease – • Operating Lease –
    recognize assets in recognize assets in No distinction
    statement of financial statement of between operating
    position as a financial position as and finance lease.
    receivable equal to a receivable equal Recognize as
    net investment in to net investment in income in profit or loss
    lease. lease. in the period in which
    • Operating Lease – • Operating Lease – they are EARNED.
    recognized on a allows recognition
    straight-line basis over of structured
    the lease term, unless payments relating
    another systematic to inflation.
    basis is more
    representative.
    INITIAL MEASUREMENT – SALE &
    LEASEBACK
    Full PFRS PFRS for SMEs PFRS for Small Entities
    • Finance Lease - the excess of • Finance Lease - the excess of
    sale proceeds over carrying sale proceeds over carrying
    amount is deferred and amount is deferred and
    amortized over the lease amortized over the lease
    term by the lessee. term by the lessee.

    • Operating Lease • Operating Lease

    - if the transaction was at - if the transaction was at


    fair value, profit or loss is
    fair value, profit or loss is recognized immediately.
    recognized immediately.
    - if sales price is below fair
    - if sales price is below fair value, profit or loss is recognized
    value, profit or loss is recognized immediately unless
    immediately unless compensated for by future
    compensated for by future below market price payments,
    below market price payments, which are deferred and
    which are deferred and amortized.
    amortized.
    - if the sale price was in
    - if the sale price was in excess of fair value, the excess is
    excess of fair value, the excess is deferred and amortized.
    deferred and amortized.
    SUBSEQUENT MEASUREMENT – LESSEE
    Full PFRS PFRS for SMEs PFRS for Small Entities
    • Finance Lease – • Finance Lease –
    depreciated depreciated
    over the shorter over the shorter
    of the lease of the lease
    term and the term and the
    useful life of the useful life of the
    asset. asset.
    SUBSEQUENT MEASUREMENT – LESSOR
    Full PFRS PFRS for SMEs PFRS for Small Entities
    • Finance Lease – • Finance Lease –
    finance income finance income
    is allocated over is allocated over
    lease term lease term
    reflecting reflecting
    constant constant
    periodic rate of periodic rate of
    return on lessor’s return on lessor’s
    net investment. net investment.
    DERECOGNITION
    Full PFRS PFRS for SMEs PFRS for Small Entities
    • Lease classification is • Lease classification is
    made at inception of made at inception of
    the lease. If at any the lease. If at any
    time the lessee and time the lessee and
    lessor agree to lessor agree to
    change the provisions change the provisions
    of lease, other than of lease, other than
    changes in changes in
    circumstances or circumstances or
    estimates, the revised estimates, the revised
    agreement is agreement is
    regarded as new regarded as new
    agreement over its agreement over its
    term. term.
    END OF PRESENTATION
    Thank you!

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