Disclosures for finance leases

Disclosures for finance leases
Essay

Introduction
The lease is defined as an arrangement where the lessor tend to convey to the lessee in
return for a payment or where there is a series of payment that is set for using an asset for a
particular time. The agreement of the lease is done by the arrangement of the lessor and lessee
where the lessor transfer the right to use an asset to the lessee against the payment for the lease
rental. The cases are mentioned for the agreement which is done mainly when there are certain
terms and conditions of the lease. The lessee has the right to properly acquire the ownership for
the asset which is found to be leased at the end of the lease period (Altamuro, Johnston, Pandit &
Zhang, 2014). The hiring of the purchase arrangement is important where the Accounting
Standard No. 19 is promulgated in providing certain accounting policies which needs to be
followed with lease transactions and the other disclosures which are made for the financial
statements. IFRS and US GAAP tend to stipulate the appropriate disclosures which are made in
relation to the other operating and the financial leases. There are disclosure requirements which
are dissimilar. Hence, for the finance leases, IFRS need to work on the balance sheets which are
presenting the financial lease obligations that are for the in-line items that are labelled as debt.
Discussion
IFRS requires holding on the disclosures which are for the notes and the layouts and are
directed to handle different companies. The notes help in providing the information related to the
breakdown of the debt that has been reported for the balance sheet into the components named:
the amount of debt which excludes the financial lease obligations and there are amount of the
financial lease obligations (Campbell et al., 2014). There are disclosures for the components set
for the balance sheet debt and this excludes any type of the financial lease obligations as well.
The information is then set for the company obligations which are for the financial and the
operating system leases that includes the future and the present values of the minimum financial
lease payments.
It has been seen that for the lessor, the disclosures of the finance lease in financial
statements claim about the reconciliation of the bringing of the gross investments and the Present
value of MLP which is important for analyzing the unearned financial income. Apart from this,
there are certain unguaranteed residual values which are found to be assimilated with the
provisions for the unearned MLP receivables (Lim, Mann & Mihov, 2014). There is a