There is a difference in the way in which leased assets may
be depreciated by the lessor under IFRS and UK GAAP
IAS 17 (paragraph 53) requires the depreciation policy for
leased assets to be consistent with the lessor’s normal
depreciation policy for similar (non-leased) assets.
Under UK GAAP (SSAP 21) it was possible for different
policies to be used for leased and non- leased assets of a similar
nature.
There is also a difference in the manner in which initial
indirect costs incurred by a lessor in negotiating and arranging a
lease are accounted for under IFRS and UK GAAP.
SSAP 21 (paragraph 44) says that “such costs may be
apportioned over the period of the lease on a systematic and
rational basis”. This implies that initial direct costs may
also be expensed as incurred. The accountancy treatment will not
affect whether the costs are capital or not – see
BLM37000.
IAS 17 paragraph 52 requires that “such costs shall be
added to the carrying amount of the leased asset and recognised as
an expense over the lease term on the same basis as the leased
income”.
