Ministry of Finance, Enterprise Accounting Guidelines - Leasing

Issued: January 18 2001
Effective: January 1 2001
Applicability: For the purposes of these Guidelines, "leasing"means an agreement to transfer the use rights of an asset to another party for a specified period in return for a rental payment (Section Three). These Guidelines have retrospective effect on leasing transactions carried out prior to the effectiveness hereof to the extent their accounting treatment is not consistent with the provisions of Sections 24 and 25 (Section 39). These Guidelines do not apply to leasing of natural resources or leaseholds and licensing of films, video tapes, writings, patents and copyrights (Section Two).

Main contents: In respect of any leasing, the Guidelines require the lessor and the lessee to classify it as lease financing or an operating lease at the commencement of the lease (Section Four). Factors to be considered in such classification are set out (Section Seven). The accounting treatment of lease financing and operating leases as required of the lessor and the lessee are specified in separate sets of detailed provisions in the Guidelines (Sections 8 to 37). In addition, the lessor and the lessee are required to comply with several disclosure requirements in respect of their lease transaction (Section 38).