FRS 102 and Finance lease: Difference between pages

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Financial Reporting Standard 102 - "The financial reporting standard applicable in the UK and Republic of Ireland" - applies to larger unlisted companies and to other reporting entities.
A finance lease usually involves the lessee (user of the asset) paying - over the life of the lease - the full cost of the asset plus a return on the finance effectively provided by the lessor.
 
The lessee-user effectively retains substantially all the risks and rewards of ownership.
However, the lessee does not obtain legal title to the leased asset.


This applies to reporting periods starting on or after 1 January 2015.
Under IAS 17 and SSAP 21, finance leases have to be accounted for 'on balance sheet' by the user of the asset.
This means that the liability to pay (the capital element of) the future lease instalments is recognised and disclosed on the face of the balance sheet.


Also known as a ''capital lease'', especially in the US.


FRS 102 - in conjunction with FRS 100, FRS 101 and FRS 103 - is designed to:


# Implement an international-based financial accounting framework for all relevant UK and Irish reporting entities and users.
== See also ==
# Use the same accounting language regardless of the size of the reporting entity.
* [[Actuarial method]]
# Retain a proportionate approach to disclosure in order to meet users’ information needs, without imposing undue reporting burdens.
* [[ED 2010/9]]
* [[Finance charge]]
* [[Hire purchase]]
* [[IAS 17]]
* [[Implied rate of interest]]
* [[Lease]]
* [[Off-balance sheet finance]]
* [[Operating lease]]
* [[SSAP 21]]




==See also==
==Other links==
* [[FRS 100]]
[http://www.treasurers.org/node/8924 Students: A Lesson on leases, The Treasurer, April 2013]
* [[FRS 101]]
* [[FRS 103]]
* [[UK GAAP]]


 
[[Category:Asset_and_Project_Finance]]
== Other links ==
[http://www.treasurers.org/node/9519 Filling the GAAP, Stanislav Varkalov, The Treasurer, November 2013]
 
[[Category:Accounting,_tax_and_regulation]]

Revision as of 06:52, 4 October 2013

A finance lease usually involves the lessee (user of the asset) paying - over the life of the lease - the full cost of the asset plus a return on the finance effectively provided by the lessor.

The lessee-user effectively retains substantially all the risks and rewards of ownership. However, the lessee does not obtain legal title to the leased asset.

Under IAS 17 and SSAP 21, finance leases have to be accounted for 'on balance sheet' by the user of the asset. This means that the liability to pay (the capital element of) the future lease instalments is recognised and disclosed on the face of the balance sheet.

Also known as a capital lease, especially in the US.


See also


Other links

Students: A Lesson on leases, The Treasurer, April 2013

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