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General description of the nature of the lease 2

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General description of the nature of the lease.  2. Nature, timing and amount of cash inflows and outflows associated with  leases, including payments for each of the five succeeding years.  3. Amount of lease revenues and expenses reported in the income statement  each period.  4. Description and amounts of leased assets by major balance sheet  classification and related liabilities. 5. Amounts receivable and unearned revenues under lease. Disclosing Lease Data Special Accounting Problems Special Accounting Problems Special Accounting Problems Special Accounting Problems
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Chapter 15-54 Leases IAS 17 Overall, similar to US GAAP Differences Terminology IFRS have more principle based classification requirements while US GAAP provides precise guidelines.
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Chapter 15-55 IAS 17- Leases A lease may be classified as either a capital or operating lease under US GAAP. Terminology difference Capital lease under US GAAP is referred to as a finance lease under IFRS
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Chapter 15-56 Lease Criteria US GAAP and IFRS contain four lease criteria that are indicators of a capital (finance) lease. The lessee acquires ownership of the leased asset at the conclusion of the lease The lessee has a bargain purchase option The term of the lease covers the majority of the leased asset’s economic life The present value of minimum lease payments is equivalent to nearly all of the leased asset’s fair value.
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Chapter 15-57 Lease Criteria IFRS has a fifth indicator of a finance lease that is not specified by US GAAP. Leased assets are of a specialized nature and are only usable by the lessee unless substantial adjustments are made to the asset.
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Chapter 15-58 Criteria Differences US GAAP specifies that the majority of the leased asset’s economic life is equal to or greater than 75% of the asset’s life. US GAAP defines substantially all of the leased asset’s fair value as 90% of the fair value of the property less any investment tax credit retained by the lessor. IFRS does not specifically define ‘majority of’ or ‘substantially all’.
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Chapter 15-59 1. Removes the distinction between operating and financing 2. On the balance sheet include a ‘right-to-use’ asset 3. Lease payments liability 4. Amortize and interest expense on P&L 5. Include additional notes 6. Exposure draft rereleased on October 23, 2012. 7. Implication, substantively only have financing leases.  Exposure Draft on Leases Exposure Draft on Leases Exposure Draft on Leases Exposure Draft on Leases
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