Lease Accounting - IAS 17

CA. Amit Daga (Finance Controller CA. CS. CFA. CIFRS. M.COM. )   (9017 Points)

11 August 2009  

 Lease (IAS 17)

A ‘lease’ is a transaction between two parties, a lessor and a lessee, where by the right to use an asset is transferred to the lessee in return for a defined series of payments to the lessor.
 
Its a way of gaining the right to use an asset usually without having to pay the full amount upfront. Its very much important source or medium and long term financing for entities.
 
Finance lease. A lease that transfers substantially all the risks and rewards of ownership of an asset. Title need not necessarily be eventually transferred.
 
Operating lease. A lease that is not a finance lease.
 
Minimum lease payments. The minimum lease payments are the minimum amount that is payable by the lessee to the lessor under a lease agreement.
For a lessee, this includes any amounts guaranteed to be paid;
For a lessor, this includes any residual value guaranteed to the lessor.