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Leases - Coggle Diagram

- - - - Depreciate over:
      - Shorter of: lease term & useful economic life
      - DR Depn charge (SPL) & Cr Acc depn (SFP)
    - - Liability is increased by interest charged to SPL:
      - Cash payments reduce lease liability:
      - Dr Finance cost (SPL) & CR Lease liability
      - Dr Lease liability & Cr Cash
      - At amortised cost table (B/F + Interest - payment = C/F)
  - - - Amounts expected to be paid under residual value guarantees
      - Options to purchase that are reasonably certain to be excercised
      - Fixed payments - any incentives
      - PV of payments not yet made:
      - Termination penalties if expected to be incurred
    - - Initial direct costs
      - Payment made at or before commencement
      - Initial value of lease liability
      - Recognised at cost:
      - Estimated costs of asset removal/dismantling as per lease conditions
    - - Options to extend if reasonably certain
      - Options to terminate if reasonably certain NOT to be exercised
      - Non cancellable periods
- - - - Variable payments valued at inception date
      - Fixed payments
      - Residual value guarantees
      - Net investment value: PV: discounted table
      - Unguaranteed residual value
      - Termination penalties
      - Purchase options reasonably expected to be exercised
      - DR Lease receivable, CR PPE (CV) & DR SPL
    - - Lease receivable is increased by interest income SPL
      - DR Lease receivable & CR Investment income (SPL)
      - Cash receipts reduce lease receivable
      - DR Cash & CR Lease receivable
      - At amortised cost: (O/B + Interest - cash received = C/B)
  - - - Keep PPE, no long term receivable
      - Risks and rewards not transferred
      - Recognise receivables on accrual concept (straight line)
      - DR Cash, CR SPL & CR Deferred income
    - - Lease rental income: DR Accrued income SFP & CR Rental income SPL
      - Depreciate the asset
  - - - Definition: lease that is not a finance lese
      - Risks & rewards have not transferred
      - Charged to SPL
    - - Definition: risks & rewards of the asset transfers to the lessee
      - Lessee has option to purchase asset < expected Fair value
      - Ownership transferred to the lessee at end of lease
      - The lease term - major part of asset's economic life
      - PV of lease payments amounts to all of the FV of the leased asset
      - Specialised leased assets - only used by lessee without major changes
      - Cancelled lease - lessee compensated lessor for loss
      - Gains and losses from FV fluctuations falls to lessee
      - Lessee can continue lease for secondary period
  - - - Head lease lessee
        
        Lease liability Y
        
        ROU X
      - Intermediate lessor
        
        Derecognise PPE X
        
        Lease receivable Y
    - - Sublease lessee
    - - Head lease lessor