Leases in the financial statements of lessees (paras. 20-35)
Superseded by IFRS 16: Leases for annual reporting periods beginning on or after 1 January 2019. Earlier application is permitted for entities that apply IFRS 15: Revenue from Contracts with Customers at or before the date of initial application of this Standard.
Finance leases
Initial recognition
20 At the commencement of the lease term, lessees shall recognise finance leases as assets and liabilities in their statements of financial position at amounts equal to the fair value of the leased property or, if lower, the present value of the minimum lease payments, each determined at the inception of the lease. The discount rate to be used in calculating the present value of the minimum lease payments is the interest rate implicit in the lease, if this is practicable to determine; if not, the lessee’s incremental borrowing rate shall be used. Any initial direct costs of the lessee are added to the amount recognised as an asset.