IAS 17 Leases
International Accounting Standard 17
Overview of IAS 17
- Issued: in 1982; re-issued in 1997 and 2003, followed by amendments
- Effective date: 1 January 2005
- Superseded by IFRS 16 Leases effective 1 January 2019
- What it does:
- It defines lease-related terms , such as lease, finance lease, operating lease, minimum lease payments, interest rate implicit in the lease, guaranteed and unguaranteed residual value, etc.;
- It classifies the lease as finance or operating and specifies 5 situations when the lease is normally classified as finance:
- Transfer of ownership of the asset;
- Option to purchase the asset at a price lower than the fair value;
- The lease term is for the major part of the economic life of the asset;
- At the inception, the present value of the minimum lease payments amounts to at least substantially all of the fair value of the leased asset;
- The lease assets are of a specialized nature
IAS 17 names also further 3 indicators that lead to the lease being classified as a finance lease.
- It outlines the rules for presenting the leases in the financial statements of both lessees and lessors;
- It prescribes the rules for presenting the sale and leaseback transactions and provides illustrative examples in its implementation guidance.
Articles about IAS 17
- Summary of IAS 17 Leases
- IFRS 16 vs. IAS 17: How the Lease Accounting Changed - you can find the summary of the main changes and simple illustrative example here
- Troubles with IFRS 16 Leases - this article outlines the main implementation challenges when adopting IFRS 16
- How to Calculate the Interest Rate Implicit in the Lease
Questions and Answers
See more questions in IFRS 16 resources.
Other Resources
- IFRS Kit - learn IFRS in 130+ videos, 140+ excel case studies, quizzes, certificates
- IFRS Refresher Modules - interactive text-based training in individual IFRS with the feedback from real tutors
- IFRS Enabler - systematical interactive IFRS training for corporate teams
- my Helpline - get answers to your specific IFRS and other questions from more than 50 top consultants + fully searchable IFRS database as a bonus