Operating lease: Difference between revisions
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The owner (lessor) retains the significant risks and rewards of ownership - usually including the responsibility for maintenance, insurance and the like, and enjoyment of a significant residual value of the asset at the end of the lease term. | The owner (lessor) retains the significant risks and rewards of ownership - usually including the responsibility for maintenance, insurance and the like, and enjoyment of a significant residual value of the asset at the end of the lease term. | ||
Relevant accounting standards include IAS 17 and Section 20 of FRS 102 which require operating leases accounted for 'off balance sheet' by the user of the asset. This means that the obligations/liabilities to pay future lease instalments are only disclosed in the notes to the financial statements, not on the face of the balance sheet. | |||
Relevant accounting standards include IAS 17 and Section 20 of FRS 102, which require operating leases accounted for 'off balance sheet' by the user of the asset. | |||
This means that the obligations/liabilities to pay future lease instalments are only disclosed in the notes to the financial statements, not on the face of the balance sheet. | |||
Revision as of 11:46, 6 November 2015
An operating lease involves the lessee (user) paying rentals for the hire of an asset for a period of time which is normally substantially less than the asset’s full useful life.
The owner (lessor) retains the significant risks and rewards of ownership - usually including the responsibility for maintenance, insurance and the like, and enjoyment of a significant residual value of the asset at the end of the lease term.
Relevant accounting standards include IAS 17 and Section 20 of FRS 102, which require operating leases accounted for 'off balance sheet' by the user of the asset.
This means that the obligations/liabilities to pay future lease instalments are only disclosed in the notes to the financial statements, not on the face of the balance sheet.
See also
