(IFRS) for Small and Medium-sized Entities (SMEs)
(IFRS) for Small and Medium-sized Entities (SMEs)
(IFRS) for Small and Medium-sized Entities (SMEs)
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<strong>IFRS</strong> FOR SMES – JULY 2009Section 20LeasesScope of this section20.1 This section covers accounting <strong>for</strong> all leases other than:(a)(b)(c)(d)(e)(f)leases to explore <strong>for</strong> or use minerals, oil, natural gas <strong>and</strong> similarnon-regenerative resources (see Section 34 Specialised Activities).licensing agreements <strong>for</strong> such items as motion picture films, videorecordings, plays, manuscripts, patents <strong>and</strong> copyrights (see Section 18Intangible Assets other than Goodwill).measurement of property held by lessees that is accounted <strong>for</strong> asinvestment property <strong>and</strong> measurement of investment property provided bylessors under operating leases (see Section 16 Investment Property).measurement of biological assets held by lessees under finance leases <strong>and</strong>biological assets provided by lessors under operating leases (see Section 34).leases that could lead to a loss to the lessor or the lessee as a result ofcontractual terms that are unrelated to changes in the price of the leasedasset, changes in <strong>for</strong>eign exchange rates, or a default by one of thecounterparties (see paragraph 12.3(f).operating leases that are onerous.20.2 This section applies to agreements that transfer the right to use assets eventhough substantial services by the lessor may be called <strong>for</strong> in connection with theoperation or maintenance of such assets. This section does not apply toagreements that are contracts <strong>for</strong> services that do not transfer the right to useassets from one contracting party to the other.20.3 Some arrangements, such as outsourcing arrangements, telecommunicationcontracts that provide rights to capacity, <strong>and</strong> take-or-pay contracts, do not takethe legal <strong>for</strong>m of a lease but convey rights to use assets in return <strong>for</strong> payments.Such arrangements are in substance leases of assets, <strong>and</strong> they should beaccounted <strong>for</strong> under this section.Classification of leases20.4 A lease is classified as a finance lease if it transfers substantially all the risks <strong>and</strong>rewards incidental to ownership. A lease is classified as an operating lease if itdoes not transfer substantially all the risks <strong>and</strong> rewards incidental to ownership.20.5 Whether a lease is a finance lease or an operating lease depends on the substanceof the transaction rather than the <strong>for</strong>m of the contract. Examples of situationsthat individually or in combination would normally lead to a lease beingclassified as a finance lease are:(a)the lease transfers ownership of the asset to the lessee by the end of thelease term.110 © IASCF
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