IAS 17-Leases

Abstract

IAS 16 centred around transactions in which property, plant and equipment are acquired by outright purchase. However, the rights to these assets might be obtained through lease transactions which can be highly sophisticated and complex¹²². The accounting for lease transactions derives from the range of alternative structures that are available to the parties. Lease contracts can be structured to allow tax benefits through specific lease terms and implied interest rate adjustments. Leases can transfer ownership of the leased asset including the transfer of some or all of the risks of ownership. The accounting for lease transactions reflects the application of the principle of substance over form.