Wiley Interpretation and Application of IFRS Standards

22 LEASES

• Introduction
• Definitions of Terms
• Classification of Leases
  • Classification of Leases—Lessee
    • Lease term
  • Classification of Leases—Lessor
  • Different Types of Finance Leases
• Recognition and Measurement
  • Accounting for Leases—Lessee
    • Initial measurement
  • Accounting for Leases—Lessor
    • Operating leases
    • Finance leases
    • Sales-type leases
    • Direct financing leases
  • Lease Modifications
• Disclosure Requirements Under IAS 17
  • Lessee Disclosures
  • Lessor Disclosures
• Examples OF Financial Statement Disclosures
• US GAAP Comparison

INTRODUCTION

Leasing has long been a popular financing option for the acquisition of business property. During the past few decades, however, the business of leasing has experienced staggering growth, and much of this volume is reported in the statements of financial position. The tremendous popularity of leasing is quite understandable, as it offers great flexibility, often coupled with a range of economic advantages over ownership. Thus, with leasing, a lessee (borrower) is typically able to obtain 100% financing, whereas under a traditional credit purchase arrangement the buyer would generally have to make an initial equity investment. In many jurisdictions, a leasing arrangement offers tax benefits compared to the purchase option. The lessee is protected to an extent from the risk of obsolescence, although the lease terms will vary based on the extent to which the lessor bears this risk. For the lessor, there will be a regular stream of lease payments, ...