21. This AS is applicable on all entities. Partial exemption is available to SMC and SM Entities.Exemption :Disclosure of lease Rental 0-12 month, 12 – 60 month & more than 60 month is not required.Disclosure of sublease Rentals received is not required.iii) Disclosure of general leasing policy followed are not to be disclosed.
3Lease means any agreement between two parties, where in one party transfer right to use any asset to another party,against consideration or series of consideration.Leases are of two types :
44. Financial Lease means lease where risk and reward incidental to ownership are also transferred to user.Right to use assetRisk & RewardsConsideration
55. Operating lease means lease other than Financial lease. Right to use AssetConsideration
66. Following situations are considered as Financial Lease : Where ownership is transferred to lease at the end of lease term.Inception of Lease End of LeaseLessee becomes automatic owner.Hire Purchase is example of Financial Lease in this case.Where there is purchase option with lessee at very reduced price based on offer from lessor, at the end of lease period.Lessor will offer to purchase.Very reduced prices ( )
7Where lease term is equal to Economic Life of asset. ( It can be appropriate value)Where Present Value of lease Rentals is equal / appropriate to fair value of asset.e) Where asset is of specialised nature and cannot be used by person other than lessee without making major modification.