GRAP 13 focuses on the accounting treatment to be followed by each of the parties to a lease agreement. A lease agreement / arrangement is where an asset is provided to a counter-party and this counter-party benefits from the asset’s exclusive use over a set period of time, in exchange for consideration.

Lease accounting asks both parties to classify the lease as either an operating or finance lease. This determination is based on whether substantially all the risks and rewards incidental to ownership have been transferred.

Once the classification has been established, a key further distinction for establishing the accounting treatment hinges on who you are in a given lease transaction, i.e., are you a lessor or a lessee?

Join us as we look at the accounting on both sides (lessor VS lessee), as well as for both types of leases.