[Illustrative Checklist] Disclosure Requirements under AS 19 | Leases

The objective of AS 19, Leases, is to prescribe for lessees and lessors, the appropriate accounting policies and disclosures in relation to finance leases and operating leases. This Standard applies to agreements that transfer the right to use assets even though substantial services by the lessor may be called for in connection with the operation or maintenance of such assets. On the other hand, this Standard does not apply to agreements that are contracts for services that do not transfer the right to use assets from one contracting party to the other. A Lease is an agreement whereby the Lessor (legal owner of an asset) conveys to the Lessee (another party) in return for a payment or series of periodic payments (Lease rents), the right to use an asset for an agreed period of time.

As per the stipulation of this standard, an entity must comply with the below-mentioned disclosure requirements:

I. Lessee: Finance leases

i. In addition to the requirements of AS 10 – PPE and the governing statue, has lessee made following disclosures for a finance lease including assets acquired on hire-purchase basis:

a) Assets acquired under finance lease as segregated from the assets owned

b) For each class of assets, the net carrying amount at the balance sheet date

c) A reconciliation between the total of minimum lease payments at the balance sheet date and their present value and the total of minimum lease payments at the balance sheet date, and their present value, for each of the following periods not later than one year, later than one year and not later than five years, and later than five years.

ii. Contingent rents recognised as expense in the statement of profit and loss for the period

iii. Under non-cancellable sub-leases as at balance sheet date the total of future minimum sublease payments expected to be received

iv. A general description of lessee’s significant leasing arrangements including, but not limited to, the following:

a) The basis on which contingent rent payments are determined

b) The existence and terms of renewal or purchase options and escalation clauses

c) Restrictions imposed by lease arrangements, such as those concerning dividends, additional debt, and further leasing

v. Whether separate presentation of the liability for the leased asset as a current liability or long-term liability as the case may be, without deducting the same from leased asset has been made, in case of lessee under finance lease

II. Lessee: Operating leases:

i. Whether following disclosures has been made by Lessee in Operating Leases:

a) The total of future minimum lease payments under non – cancellable operating leases for each of the following periods not later than one year, later than one year and not later than five years, and later than five years.

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