Disclosure Requirements Under IAS 17

Lessee Disclosures

1. Finance Leases

   IAS 17, paragraph 23, mandates the following disclosures for lessees under finance leases:

   1. For each class of asset, the net carrying amount at balance sheet date

   2. A reconciliation between the total of minimum lease payments at the balance sheet date, and their present value. In addition, an enterprise should disclose the total of the minimum lease payments at the balance sheet date, their present value, for each of the following periods:

      1. Due in one year or less

      2. Due in more than one but no more than five years

      3. Due in more than five years

   3. Contingent rents included in profit or loss for the period

   4. The total of minimum sublease payments to be received in the future under noncancelable subleases as of the balance sheet date

   5. A general description of the lessee's significant leasing arrangements including, but not necessarily limited to the following:

      1. The basis for determining contingent rentals

      2. The existence and terms of renewal or purchase options and escalation clauses

      3. Restrictions imposed by lease arrangements such as on dividends or assumptions of further debt or further leasing

Furthermore, IAS 17, paragraph 23, clarifies that the requirements of IAS 32 (Financial Instruments: Recognition and Measurement) also are applicable to finance leases.

2. Operating Leases

   IAS 17, paragraph 26, sets forth in greater detail the disclosure requirements that will be applicable to lessees under operating leases. While some of these were suggested under original IAS 17 or are implicitly needed to provide adequate disclosure, the revised standard offers preparers more explicit guidance.

   Lessees should, in addition to the requirements of IAS 32, make the following disclosures for operating leases:

   1. Total of the future minimum lease payments under noncancelable operating leases for each of the following periods:

      1. Due in one year or less

      2. Due in more than one year but no more than five years

      3. Due in more than five years

   2. The total of future minimum sublease payments expected to be received under noncancellable subleases at the balance sheet date

   3. Lease and sublease payments included in profit or loss for the period, with separate amounts of minimum lease payments, contingent rents, and sublease payments

   4. A general description of the lessee's significant leasing arrangements including, but not necessarily limited to the following:

      1. The basis for determining contingent rentals

      2. The existence and terms of renewal or purchase options escalation clauses

      3. Restrictions imposed by lease arrangements such as on dividends or assumption of further debt or on further leasing

Lessor Disclosures

1. Finance Leases

   IAS 17, paragraph 39, requires enhanced disclosures compared to the original standard. Lessors under finance leases are required to disclose, in addition to disclosures under IAS 32, the following:

   1. A reconciliation between the total gross investment in the lease at the balance sheet date, and the present value of minimum lease payments receivable as of the balance sheet date, categorized into

      1. Those due in one year or less

      2. Those due in more than one year but not more than five years

      3. Those due beyond five years

   2. Unearned finance income

   3. The accumulated allowance for uncollectible minimum lease payments receivable

   4. Total contingent rentals included in income

   5. A general description of the lessor's significant leasing arrangements

2. Operating Leases

   For lessors under operating leases, IAS 17, paragraph 48, has prescribed the following expanded disclosures:

   1. For each class of asset, the gross carrying amount, the accumulated depreciation and accumulated impairment losses at the balance sheet date

      1. Depreciation recognized in income for the period

      2. Impairment losses recognized in income for the period

      3. Impairment losses reversed in income for the period

   2. Depreciation recognized on assets held for operating lease use during the period

   3. The future minimum lease payments under noncancellable operating leases, in the aggregate and classified into

      1. Those due in no more than one year

      2. Those due in more than one but not more than five years

      3. Those due in more than five years

   4. Total contingent rentals included in income for the period

   5. A general description of leasing arrangements to which it is a party