Presentation of “Lease Receivables” in the Financial Statements

Ind AS 116,’ Leases’ specifies that, upon commencement, a lessor should recognize assets held under a finance lease on its balance sheet and present them as a ‘Receivables’ at an amount equal to the net investment in the lease. However, it does not offer explicit guidance on how to recognize ‘lease receivables’ in financial statements. Nevertheless, the guidance note pertaining to Schedule III for companies adhering to Ind AS categorizes leasing under ‘Loans’ within the ‘Financial Assets’ section.

This raises a pertinent question: Should ‘Lease Receivables’ be also included as part of ‘Loans’ on the Company’s Balance Sheet? Additionally, whether presenting lease receivables within ‘Loans’ rather than ‘Receivables’ may raise doubt on the Company’s core business nature i.e. leading stakeholders to initially perceive it as a lending institution?

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