IFRS 16Chapter 10Lesson 1
Lessor: finance lease or operating lease?
Step 1 of 7Learning objectives
Go deeper+3 deeper insights · +1 calculation · +1 point of attention
Unlike the lessee, the lessor keeps two accounting models. Everything turns on one question: does the contract transfer to the lessee substantially all the risks and rewards incidental to ownership of the asset? The lesson presents the situations and indicators that point to the answer, when classification is made, the case of land and buildings, and subleases, classified by reference to the right-of-use asset.
30 minNot started
Learning objectives
- Explain the lessor's classification criterion (transfer of substantially all the risks and rewards) and what those risks and rewards cover.
- Analyse a contract using the finance lease situations and indicators, knowing that they are not always conclusive.
- Place classification in time (inception date, reassessment only on a modification).
- Classify the land and building elements of a single contract separately.
- Classify a sublease by reference to the right-of-use asset arising from the head lease.