Lease

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ACCA F7考试：Lease
Lease Classification
There are two types of lease classification─finance leases and operating leases.
Finance lease：
is a lease which transfers substantially all of the risks and rewards incident to the ownership of an asset;
title may or may not eventually be transferred.
Operating lease:
is a lease other than a finance lease.
Risks and Rewards of Ownership
Risks may be represented by the possibility of:
losses from idle capacity or technological obsolescence; or
variations in return due to changing economic conditions.
Rewards may be represented by the expectation of:
profitable operation over the asset's economic life; or
gain from appreciation in value or realisation of residual value.
Indicators
IAS 17 lists the following as examples of situations where a lease would normally be classified as a finance lease:
the lease transfers ownership of the asset to the lessee by the end of the lease term;
the lessee has the option to purchase the asset at a bargain price and it seems likely, at the inception of the lease, that this option will be exercised;
the lease term is for the major part of the useful life of the asset even if title is not transferred;
at the inception of the lease, the present value of the minimum lease payments is greater than, or equal to, substantially all of the fair value of the leased asset;
the leased assets are of a specialised nature such that only the lessee can use them without major modifications being made;
if the lessee can cancel the lease any losses associated with the cancellation are borne by the lessee;
gains or losses from the fluctuation in the fair value of the residual fall to the lessee (e.g. in the form of a rent rebate equalling most of the sales proceeds at the end of the lease); and
the lessee has the ability to continue the lease for a secondary period at a rent which is substantially lower than market rent.