BLM11005 – Lease accounting: lease classification: introduction to detail
As mentioned in
BLM00035, accountants classify leases as
one of two kinds: finance leases and operating leases.
These distinctions are also important for tax purposes.
The way in which leases are classified and accounted for is
dependent on which party holds substantially all the risks and
rewards of ownership of the asset. There are a number of key
concepts that need to be considered when looking at the
classification of a lease including
