International bond and Operating lease: Difference between pages

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imported>Doug Williamson
(Delete 'normally' to align with Eurobond page.)
 
imported>Doug Williamson
(Update for change in lease accounting regime.)
 
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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.


Formerly (and still much more commonly) known as a Eurobond.


An offshore bond in the international capital markets, issued in a [[Eurocurrency]], most frequently in USD.
Relevant accounting standards include [[IAS 17]] and Section 20 of [[FRS 102]], under which operating leases have historically been accounted for 'off balance sheet' by the user of the asset, and [[IFRS 16]], which brings all leases 'on balance sheet' with effect from 2019.  


Maturities at issue are normally greater than one year.


They are usually - but not always - in bearer form.
===Off balance sheet accounting===


They can be issued on any interest basis.
'Off balance sheet' accounting treatment for operating leases 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.


 
This accounting treatment will be phased out over time, and replaced by mandatory 'on balance sheet' accounting for all leases.
2.
 
Any bond issued outside the country of domicile of the issuer.
 
 
3.
 
The term is also sometimes used (incorrectly) to refer to a global bond.




== See also ==
== See also ==
* [[Domestic bond]]
* [[Finance lease]]
* [[Eurobond]]
* [[IFRS 16]]
* [[Eurocurrency]]
* [[IAS 17]]
* [[Foreign bond]]
* [[FRS 102]]
* [[Global bond]]
* [[Lease]]
* [[Off balance sheet]]
* [[MCT]]


[[Category:Technical_skills]]
[[Category:Corporate_finance]]

Revision as of 14:58, 11 April 2018

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, under which operating leases have historically been accounted for 'off balance sheet' by the user of the asset, and IFRS 16, which brings all leases 'on balance sheet' with effect from 2019.


Off balance sheet accounting

'Off balance sheet' accounting treatment for operating leases 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.

This accounting treatment will be phased out over time, and replaced by mandatory 'on balance sheet' accounting for all leases.


See also