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When is a change to the terms of an operating lease considered significant enough to derecognise in full the existing lease and then record the lease as a new lease?
in IAS 17 - Leases by

1 Answer

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he criteria for a capital lease can be any one of the following four alternatives:

Ownership. The ownership of the asset is shifted from the lessor to the lessee by the end of the lease period; or
Bargain purchase option. The lessee can buy the asset from the lessor at the end of the lease term for a below-market price; or
Lease term. The period of the lease encompasses at least 75% of the useful life of the asset (and the lease is noncancellable during that time); or
Present value. The present value of the minimum lease payments required under the lease is at least 90% of the fair value of the asset at the inception of the lease.
If a changes in lease agreement contains any one of the preceding four criteria, the lessee records it as a capital lease
by Level 5 Member (11.3k points)