IFRS vs. US GAAPIAS 17 vs. FAS 13 as amended many times

Continued on next slide

Note that IFRS has no “bright

line” rules

IFRS US GAAP

For Lessor Operating lease Operating lease

Finance lease Direct Financing Lease

Finance lease Sales-type leaseFinance lease Leveraged lease

For Lessee Operating lease Operating lease

Finance lease Capital lease

Type of LeaseAccounting Treatment for Initial Direct Costs

OperatingRecorded as an asset and amortized over the lease term*

Direct Financing (US)Finance (IFRS)

Recorded as part of investment in lease and amortized over lease term by reducing interest revenue (find new implicit rate)*

Sales-type Lease (US)Finance if lessor is manufacturer or dealer (IFRS)

Immediately recognized as cost of goods sold (reduces profit or increases loss on sale of leased asset)