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Greenwashing is the act of distributing false information about something being more environmentally friendly than it actually is.

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In the first video of this two-part video series, Elisa introduces us to sustainability. She begins by looking at the difference between sustainability and corporate social responsibility, two terms that can be easily confused.

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Banking Essentials - Part I

This pathway will walk us through the basics of banks, starting with some of the different types and their main functions, then starting to look at the regulation faced by the banks, both before and after the Global Financial Crisis.

Greenwashing

Greenwashing is the act of distributing false information about something being more environmentally friendly than it actually is.

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+1,000 expert presented, on-demand video modules

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Engage with our video hotspots and knowledge check-ins

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Gain CPD / CPE credits and professional certification

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Build, scale and manage your organisation’s learning

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Connect Finance Unlocked to your current platform

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More featured content

Tackling the Cost of Living Crisis

In this video, Max discusses the cost-of-living crisis currently enveloping the UK. He examines its impact on households as well as the overall economy.

CSR and Sustainability in Financial Services

In the first video of this two-part video series, Elisa introduces us to sustainability. She begins by looking at the difference between sustainability and corporate social responsibility, two terms that can be easily confused.

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IFRS 16 Lessor Presentation

IFRS 16 Lessor Presentation

Saket Modi

20 years: Chartered accountant & educator

In this second part of the series, Saket describes the terms by which an asset is leased and outlines an example.

In this second part of the series, Saket describes the terms by which an asset is leased and outlines an example.

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IFRS 16 Lessor Presentation

5 mins 28 secs

Overview

This example is about the lessor, the entity whose equipment is being leased.

Key learning objectives:

  • Identify how to calculate the lease receivable

  • Identify how to calculate the gross investment, net investment, total income and depreciation

  • Identify how this is presented in the profit and loss statement

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Summary

Assuming the following, what is the lease receivable on initial recognition?

An asset is leased on the following terms:

  • Term: Three years
  • Carrying amount: £20,000 receivable in arrears at the end of each of the three years
  • Unguaranteed residual value at the end of the lease term: £1500
  • Lessor’s initial direct costs £1,335
  • Rate implicit in the lease: 3.95%

Lease receivable on initial recognition: £20,000 + £1,335 = £21,335, which includes the lessor’s initial direct costs of entering into the lease.

What is the subsequent measurement of the lease receivable?

Lease receivable = Balance at the end of the year - balance at the beginning of the year - interest + lease payment

What is the total finance income?

  • Gross investment in the lease = minimum lease payments receivable + unguaranteed residual value: £21,600 + £1,500 = £23,100
  • Net investment in the lease = the carrying amount of £20,000 + the initial direct costs of £1,335 = £21,335
  • The total finance income is the difference between the gross investment of £23,100 and net investment of £21,335 = £1,765

How is this presented in the statement of profit and loss?

Now, assume the lessor classified the lease as an operating lease, how does presentation in the profit and loss statement differ?

The depreciation over three years = carrying amount of the asset (£20,000) + initial direct costs (£1,335) - unguaranteed residual value (£1,500) = £19,835.

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Saket Modi

Saket Modi

Saket is a financial trainer and consultant based out of London. He specialises in advanced accounting, financial reporting and financial analysis, particularly with regards to International Financial Reporting Standards (IFRS), International Public Sector Accounting Standards (IPSAS) and Financial instruments.

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