1 / 9

Classification of leases in SCOA

Classification of leases in SCOA. National/Provincial Road Shows July/August 2009 Presented by: SCOA Committee National Treasury. Content. Definition of a lease Types of lease agreements Classification of payments made in terms of a finance lease and operating lease

deidra
Download Presentation

Classification of leases in SCOA

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript


  1. Classification of leases in SCOA National/Provincial Road Shows July/August 2009 Presented by: SCOA Committee National Treasury

  2. Content • Definition of a lease • Types of lease agreements • Classification of payments made in terms of a finance lease and operating lease • Frequently asked questions (FAQ)

  3. Definition of a lease A lease is an agreement whereby the lessor conveys to the lessee in return for a payment or series of payments the right to use an asset for an agreed period of time

  4. Finance vs operating lease

  5. Classification Operating lease payments = current payments (use) Finance lease payments = capital payments (capital) Item Asset Project Lease Payments Operating lease Finance lease Interest Finance leases Leased assets Buildings & other Intangible assets Land & subsoil assets Other mach. & equip Transport assets Stand alone item Stand alone current Stand alone capital

  6. Operating lease Operating lease payments = current payments (use) Item Asset Project Lease Payments Operating lease Leased assets Transport assets Stand alone item Stand alone current • Amount recognised is equal to the payment made to the lessor (monthly, quarterly or annually)

  7. Finance lease Finance lease payments = capital payments (capital) Item Asset Project Lease Payments Finance lease Interest Finance leases Leased assets Transport assets Stand alone item Stand alone capital Stand alone current Amount recognised is equal to the payment made to the lessor (monthly, quarterly or annually) separating capital & interest

  8. FAQ • R5,000 rule does not apply to leases • Transitional arrangement in the classification circular • Classification is made at the inception of the lease • Leased assets are not included in the main asset register of a department (lease register is required) • Split between interest & capital – amortisation schedule starting with FV / present value of lease payments

  9. Questions?

More Related