IFRS 16 Lessor accounting

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April 25, 2020 at 5:18 pm #569226
sam543
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Hello,

Could you please explain why when accounting for finance lease, lessor has to increase lease receivable by finance income earned before decreasing it by the cash receipts? Don’t minimum lease payments that make up lease receivable include implicit interest paid by lessor.?

Thank you.
April 28, 2020 at 9:04 pm #569453
P2-D2
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Hi,

The payments received comprise the principal and interest. The outstanding balance will accrue interest during the year, hence the receivable will increase, and then the payment will reduce the outstanding balance.

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