IFRS Notes

Finance lease, Lessee


IAS 17-pr20
Lessee
recognises finance leases
in the statement of financial position
as assets and liabilities


IAS 17-pr20
Lessee
The amount to be recognised by lessee
is the lower of (1) and (2)
(1) fair value of leased asset
(2) present value of minimum lease payments

(1) and (2) are measured
at the inception of the lease

Discount rate for present value calculation is (3)

(3) interest rate implicit in the lease

If (3) cannot be determined, use (4)
(4) lessee's incremental borrowing rate


IAS 17-pr25
Subsequent measurement
Minimum lease payment = (5) + (6)

(5) finance charge
(6) reduction of lease liability

Allocation of finance charge
is made to generate (7)

(7) constant periodic rate of interest on (8)
(8) remaining balance of lease liability