Operating lease accounting is very simple compared with
finance lease accounting and is similar under UK GAAP and IFRS.
Accounting differences arise with respect to depreciation of
operating lease assets, initial indirect costs for lessors (
BLM12015) and operating lease incentives
(
BLM12025).
As far as the recognition of income and expenses is
concerned, lessors and lessees are treated in a similar way, see
BLM12010 and
BLM12020 respectively.
An operating lessor records the leased asset on its balance
sheet in the same way as it records any other fixed asset and it
should be depreciated over its useful life in the normal way.
An operating lessee records no asset on its balance sheet.
Only the rentals pass through its profit and loss account.
