The And Measurement Of Leases

1759 Words Dec 2nd, 2015 8 Pages
Recognition and measurement of leases is an important part of accounting for leasing. Many companies and organizations rely on leasing as a means of acquiring assets without actually owning the asset. Companies often lease land and buildings, company vehicles like trucks for construction, and equipment for manufacturing or a business; like computers, copiers, and printers. Leasing allows for companies to stay in the game when it comes to new technology, so that when new technology comes out, companies will be able to start a new lease with new equipment. While leasing is a popular way of acquiring assets, it’s possible that companies and organization will pay more money for a lease then if the asset had been purchased. Leasing of assets allows for companies or organizations to acquire assets they need immediately, rather than buy them outright. Companies that are just starting out or companies that are floundering find comfort in being able to use leased assets to get their business off the ground or back on its feet.

When it comes to lease classification, IFRS is not as strict as U.S. GAAP. Some situations that would lead to a classification as a finance lease would be BPO and transfer of the ownership at the end of the lease. These are the same as U.S. GAAP. Percentages are not used for IFRS like in GAAP. IFRS uses an “eyeball” method, as opposed to GAAP, which uses a percentage. This applies to criteria for present value of the minimum lease payments and…

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