4 COVID-19 accounting for lease modifications The practical expedient The practical expedient avoids the need for lessees to carry out an assessment to decide whether a COVID-19-related rent concession received is a lease modification or not. IAS 17 Leases deals with the accounting and financial reporting of the very common business transaction—lease. Definition of a lease on initial application. IAS 17.13 requires the lease classification to be determined at the inception of the lease. how do you treat cost prior to the execution of a lease? IAS 17 Leases 1 Overview IAS 17 sets out the required accounting treatments and disclosures for finance and operating leases by both lessors and lessees, except where IAS 40 is applied to investment property held by a lessee. leases are measured based on remaining lease payments, and finance leases remeasured at the carrying amount of the lease liability under IAS 17 Leases (see Section … BCZ241-BCZ244) Allocation of lease payments between land and buildings (paras. The lessee accounts for the rent concession as if the change was not a lease modification. answered Nov 7, 2017 in IAS 17 - … BC238-BC240A) Lessor: classification of leases - leases of land and buildings (2003 and 2009 amendments to IAS 17) (paragraphs B55-B57) (paras. Lease modification. IAS 17 provides the following examples and indicators of situations that individually or in combination would normally lead to a lease being classified as a finance lease. BCZ241-BCZ250) Land element in long-term leases (paras. Leases are the great example of “off-balance sheet” financing if not recorded properly in the financial statements. Definitions A finance lease – a lease that … IAS 17 Leases stipulates that whether a lease is a finance lease or an operating lease depends on the substance of the transaction rather than the form of the contract.. 32In addition, the requirements for disclosure in accordance with IAS 16, IAS 36, IAS 38, IAS 40 and IAS 41 apply to lessees for assets leased under finance leases. In the past, many companies used to hide their finance lease liabilities and they reported all lease payments directly to profit or loss when paid. Following the change to IAS 17 included in the Improvements to IFRS issued by the IASB in 2009 (and adopted by the EU in March 2010), classification of a lease of land is on the same basis as for all other assets, although it should be noted that in finance lease) (IAS 17 paragraphs 4 and 7-12). Recent questions and answers in IAS 17 - Leases 1 answer. IFRS 16 introduces a few practical expedients at the date of its application and transition from IAS 17 as discussed below. Whereas, under the previous guidance in IAS 17, Leases, a lessee had to make a distinction between a finance lease (on balance sheet) and an operating lease (off Lease modifications (paragraphs 79-80 and 87) (paras. Whether a lease is classified as a finance lease or as an operating lease depends on the substance of the transaction rather than the legal form of the contract. answered Dec 7, 2017 in IAS 17 - Leases by umarhussainia Level 5 Member (11.3k points) 1 answer. Situations that, individually or in combination, would normally lead to a lease being classified as a finance lease are : the lease transfers ownership of the asset to the lessee by the end of the lease term; BCZ245-BCZ247) In January 2016 the International Accounting Standards Board (IASB) issued IFRS 16, ‘Leases’, and thereby started a new era of lease accounting – at least for lessees! 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