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IAS 17 Leases

IAS 17 Leases sets out the appropriate accounting policies and disclosure to apply in relation to leases in the financial statements of both lessees and lessors.

Revised December 2003. Effective 1 January 2005. Withdrawn for periods starting on or after 1 January 2019 when IAS 17 is superseded by IFRS 16 Leases.

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Synopsis

Leases are classified as either operating or finance leases. A finance lease is one which transfers substantially all risks and rewards of ownership to the lessee. Accounting guidance is provided for both lessor and lessee:

Operating lease

Lessee - Lease payments recognised as an expense in profit or loss on a straight line basis over the lease term. 

Lessor - Lease income is recognised on a straight line basis over the lease term. The asset is presented in the statement of financial position (balance sheet)

Finance lease

Lessee - The asset and a corresponding liability are recognised initially at fair value or the present value of minimum lease payments if lower. A finance charge is recognised over the period of the lease. 

Lessor - The asset is derecognised and a receivable recognised, initially equal to the net investment in the lease. Finance income is recognised over the period of the lease.

Sale and leaseback transactions are accounted for according to the type of lease and amount of sales proceeds in comparison to fair value.

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Annual period starts
Effective version of standard
Notes on amendments 
1 January 2016 – 31 December 2018 IAS 17 2018 Required Standards 
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The following interpretations refer to IAS 17

This page was last updated 26 March 2019