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of <h1>Lease accounting rules distinguishing finance vs operating leases, plus sale-and-leaseback treatment and disclosure requirements, set out.</h1> Prescribes accounting classification, recognition, measurement and disclosure requirements for leases by defining key terms and distinguishing finance leases (substantially transferring risks and rewards) from operating leases, with classification determined at inception and revised only upon specified contractual modifications. For lessees, finance leases must be recognised as an asset and corresponding liability at fair value or present value of minimum lease payments, with lease payments apportioned between finance charge and liability reduction and the asset depreciated and tested for impairment; operating lease payments are expensed generally on a straight-line basis. For lessors, finance leases are recognised as a receivable equal to net investment with finance income allocated at a constant periodic return, while operating lease assets remain within fixed assets with lease income recognised generally on a straight-line basis. Sale-and-leaseback gains/losses are deferred and amortised for finance leasebacks, but recognised immediately or deferred based on fair value for operating leasebacks, with specified disclosures (and limited exemptions for Small and Medium Sized Companies).
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