quick guide to classification of lease transactions national treasury presenter: scoa technical...
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QUICK GUIDE TOCLASSIFICATION OF LEASE TRANSACTIONS
NATIONAL TREASURY
Presenter: SCOA Technical Committee| National Treasury|
Content
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• Definition of a lease
• Types of lease agreements
• Operating Leases Infrastructure
• Operating Leases Non-Infrastructure
• Classification of payments made in terms of a operating lease and
finance lease
• Frequently asked questions (FAQ)
Definition of a lease
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A lease is an agreement whereby the lessor conveys to the lessee in return
for a payment or series of payments the right to use an asset for an agreed
period of time
Operating Leases Infrastructure
Operating leases of infrastructure refers to leases of buildings and other fixed structures.
•Buildings includes, however not limited to:– Office buildings– Parking Cover and Open– Prisons and Rehabilitation Centres– Foreign Missions (Dwellings)
•Other Fixed Structures included, however not limited to:– Harbours– Railways– Airports– Telecommunication
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Operating Leases Non-Infrastructure Operating Leases Non-infrastructure refers to leases of other machinery and equipment, transport equipment, biological assets, land and subsoil as well as software and intangible.
•Other Machinery and Equipment includes, however not limited to:– Computer Equipment– Furniture and Office Equipment– Construction and maintenance Equipment– Security Equipment
•Transport Equipment includes, however not limited to:– Buses– Motor Vehicles– Mobile Offices
•Land and Subsoil includes, however not limited to:– Land Developed– Land Undeveloped
•Software and Intangible includes, however not limited to:– Software and other Intangible assets
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Classification
Operating lease payments = current payments
Finance lease payments = capital payments
Tangible Capital Assets
Building & other
fixed str
Intangible assets
Land & subsoil
assets
Other mach. &
equip
Transport assets
Lease Payments
Operating leaseOperating lease – Infrastructure
Operating lease – Non-Infrastructure
Finance leaseFinance leases buil&ot fix str
Finance leases soft&int ass
Finance leases land&sub ass
Finance leases oth mach&equip
Finance leases trnsp eqp
Infrastructure
Operating lease Infra: Operating (CUR)
Non infra:operating leases (cur)
Operating lease Infra: finance leases(cap)
Non infra:finance leases (cap)
Operating lease Non-Infrastructure
Tangible Capital Assets
Transport assets
Other machinery & equipment
Land & subsoil assets
Intangible capital assets
Goods and Services
Operating leases-non
infrastructure
Operating Lease
Non infra:operating
leases (cur)
Operating lease Infrastructure
Operating lease payments = current payments
Operating Lease
Infra:operating
leases (cur)
Tangible Capital Assets
Residential building
Non-residential building
Other fixed structures
Goods and Services
Operating leases
infrastructure
Finance lease Infrastructure
Finance lease payments
Finance Lease
Infrastructure finance
leases: cap
Tangible Capital Assets
Residential building
Non-residential building
Other fixed structures
Pur/Const Capital Assets
Finance leases build&ot fix
str
Finance lease Non-Infrastructure
Finance lease payments
Finance Lease
Non infra:finance
leases (cap)
Pur/Const Capital Assets
Finance leases trans equip
Finance leases oth mach
Finance leases land& subsoil ass
Finance leases soft&int ass
Tangible Capital Assets
Transport equipment
Other machinery & equipment
Land & subsoil assets
Software & Intangible capital
asset
FAQ
• R5,000 rule does not apply to leases
• Classification is made at the inception of the lease
• Leased assets are not included in the main asset
register of a department (lease register is required)
• Additional information on leases – please refer to
General Recognised Accounting Practice for National
and Provincial Departments (Modified Cash Standard)
chapter on leases
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