At the commencement of the lease term, lessees shall recognise finance leases as assets and liabilities in their statement of financial positions 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 (IAS 17.20).

If you have a doubt how to classify leasing correctly as operating leases, or financial leasing we recommend 24iValue system Financial Leasing module. 

This service is indispensable when you do not know how to discount the lease payments and to determine the present value of lease obligations.


You'll be fine even if you do not know what the lease is!

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