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What's the meaning of Classification of leases - IFRS ?

帮考网校2020-10-15 16:23:01
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The classification of leases under IFRS (International Financial Reporting Standards) refers to the process of categorizing leases into two types: finance leases and operating leases. This classification is important because it affects how a company accounts for the lease in its financial statements. Finance leases are treated as assets and liabilities on the balance sheet, while operating leases are treated as expenses on the income statement. The criteria for determining whether a lease is a finance or operating lease include factors such as the lease term, the present value of lease payments, and the transfer of ownership at the end of the lease term.
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