International Accounting Standard (IAS) 17 (Revised 2005) «Leases»

CONTENTS

paragraphs

INTRODUCTION

IN1-IN13

INTERNATIONAL ACCOUNTING STANDARD 17

LEASES

OBJECTIVE

1

SCOPE

2-3

DEFINITIONS

4-6

CLASSIFICATION OF LEASES

7-19

LEASES IN THE FINANCIAL STATEMENTS OF LESSEES

20-35

Finance leases

20-32

Initial recognition

20-24

Subsequent measurement

25-32

Operating leases

33-35

LEASES IN THE FINANCIAL STATEMENTS OF LESSORS

36-57

Finance leases

36-48

Initial recognition

36-38

Subsequent measurement

39-48

Operating leases

49-57

SALE AND LEASEBACK TRANSACTIONS

58-66

TRANSITIONAL PROVISIONS

67-68

EFFECTIVE DATE

69

WITHDRAWAL OF IAS 17 (REVISED 1997)

70

APPENDIX

Amendments to other pronouncements

APPROVAL OF IAS 17 BY THE BOARD

BASIS FOR CONCLUSIONS

IMPLEMENTATION GUIDANCE

Illustrative examples of sale and leaseback transactions that result in operating leases

International Accounting Standard 17 Leases (IAS 17) is set out in paragraphs 1-70 and the Appendix. All the paragraphs have equal authority but retain the IASC format of the Standard when it was adopted by the IASB. IAS 17 should be read in the context of its objective and the Basis for Conclusions, the Preface to International Financial Reporting Standards and the Framework for the Preparation and Presentation of Financial Statements. IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors provides a basis for selecting and applying accounting policies in the absence of explicit guidance.

Introduction

IN1

International Accounting Standard 17 Leases (IAS 17) replaces IAS 17 Leases (revised in 1997) and should be applied for annual periods beginning on or after 1 January 2005. Earlier application is encouraged.

Reasons for revising IAS 17

IN2

The International Accounting Standards Board developed this revised IAS 17 as part of its project on Improvements to International Accounting Standards. The project was undertaken in the light of queries and criticisms raised in relation to the Standards by securities regulators, professional accountants and other interested parties. The objectives of the project were to reduce or eliminate alternatives, redundancies and conflicts within the Standards, to deal with some convergence issues and to make other improvements.

IN3

For IAS 17 the Board's main objective was a limited revision to clarify the classification of a lease of land and buildings and to eliminate accounting alternatives for initial direct costs in the financial statements of lessors.

IN4