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U.S. GAAP: Accounting for Leases |
IFRS: Accounting for Leases |
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Capital lease accounting is required if one of four defined conditions are met; otherwise, operating lease
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Similar to US GAAP; finance lease treatment if risks and rewards are transferred to lessee; also if property is special purpose for lessee use |
| No additional factors that parallel those under IFRS for determination of financing (capital) treatment by lessor |
If lessee to bear lessor’s loss upon lease cancellation, or lessee will shoulder gain or loss from change in residual value of leased asset, or lessee has bargain renewal right, then lease may be deemed financing transaction for lessor
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Third-party guarantees cannot be included in minimum lease payments to determine whether capital lease criteria are met |
Third-party guarantees must be included in minimum lease payments to determine whether capital lease criteria are met
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Present value of lease payments computed using incremental borrowing rate, unless practical to determine implicit rate that is lower than incremental borrowing rate
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Present value of lease payments computed using implicit rate (if unknown, incremental rate can be used) |
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More guidance provided on specialized topics; deferral of profit on sale-leasebacks is required
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Only general guidance; profit recognition on sale-leasebacks permitted if fair value priced |
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Separate accounting for land and building in combined lease depends on terms and materiality of land
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Separation of land and building components of lease is mandatory under recent provisions |
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Output contracts are leases
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Output contracts are not leases |
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Leasehold interest in land accounted for as prepayment
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Leasehold interest in land can be accounted for as investment property, valued at fair value with changes in current earnings; or else as prepayment |
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Gain on sale/leaseback not recognized in current earnings, but deferred and amortized, unless seller retains use of much of asset, in which case gain is recognized (immediate recognition of loss also commonly required)
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Gain on sale/leaseback amortized over term of financing lease, but recognized at once if operating leaseback |
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Lease obligations disclosures more extensive than under IFRS
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Lease obligations disclosures less than under GAAP |
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Joint convergence project with IASB, with 2008 discussion document promised, may simplify and expand capitalization requirements
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Joint convergence project with FASB, with 2008 discussion document promised, may simplify and expand capitalization requirements |
