![]() the lessee has the option to purchase the asset at a price which is expected to be sufficiently lower than fair value at the date the option becomes exercisable that, at the inception of the lease, it is reasonably certain that the option will be exercised.the lease transfers ownership of the asset to the lessee by the end of the lease term.Situations that would normally lead to a lease being classified as a finance lease include the following: Whether a lease is a finance lease or an operating lease depends on the substance of the transaction rather than the form. Classification is made at the inception of the lease. All other leases are classified as operating leases. ![]() biological assets provided by lessors under operating leases (see IAS 41)Ī lease is classified as a finance lease if it transfers substantially all the risks and rewards incident to ownership.biological assets held by lessees under finance leases (see IAS 41).investment property provided by lessors under operating leases (see IAS 40).property held by lessees that is accounted for as investment property for which the lessee uses the fair value model set out in IAS 40.However, IAS 17 does not apply as the basis of measurement for the following leased assets: IAS 17 applies to all leases other than lease agreements for minerals, oil, natural gas, and similar regenerative resources and licensing agreements for films, videos, plays, manuscripts, patents, copyrights, and similar items. The objective of IAS 17 (1997) is to prescribe, for lessees and lessors, the appropriate accounting policies and disclosures to apply in relation to finance and operating leases. SIC-27 Evaluating the Substance of Transactions in the Legal Form of a LeaseĪmendments under consideration by the IASB.IFRIC 4 Determining Whether an Arrangement Contains a Lease.IAS 17 will be superseded by IFRS 16 Leases IAS 17 amended for Annual Improvements to IFRSs 2009 about classification of land leasesĮffective date of the April 2009 revisions to IAS 17, with early application permitted (with disclosure) Revised version of IAS 17 issued by the IASB ![]()
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