IPSAS Explained: A Summary of International Public Sector Accounting Standards, 2nd Edition

IPSAS 13: Leases

Objective

The objective of this standard is to prescribe, for lessees and lessors, the appropriate accounting policies and disclosures to apply in relation to finance and operating leases.

The IFRS on which the IPSAS is based

IAS 17, Leases

Content

Principal definitions

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.

A finance lease is a lease that transfers substantially all the risks and rewards incident to ownership of an asset. Title may or may not eventually be transferred. All other leases are operating leases. Operating leases do not transfer substantially all the risks and rewards incident to ownership of an asset.

Minimum lease payments are the payments over the lease term that the lessee is, or can be, required to make, excluding contingent rent, costs for services and, where appropriate, taxes to be paid by and reimbursed to the lessor, together with:

a) For a lessee, any amounts guaranteed by the lessee or by a party related to the lessee

b) For a lessor, any residual value guaranteed to the lessor by:

i) The lessee

ii) A party related to the lessee

iii) An independent third party unrelated to the lessor that is financially capable of discharging the obligations under the guarantee

However, if the lessee has an option to purchase the asset at a price that is expected to be sufficiently lower than the fair value at the date ...