AASB 101.61 For each asset and liability line item that combines amounts expected to be recovered or settled (a) no more than 12 months after the reporting period, and (b) more than 12 months after the reporting period, an entity shall disclose the amount expected to be recovered or settled after more than 12 months.
Instead of disclosing this information in a separate note it may be more appropriate to include such disclosures in the relevant asset and liability notes. An illustrative example of these disclosure items has not been given in the Model on the basis that the balance sheet and other notes make the required disclosures. If not used, departments should omit this Note and renumber succeeding notes.
Note 30. Leases
[Please note the narrative illustrations of Note 30(a) –(d) below are based on a fictitious department. Therefore entities should exercise judgement in determining their own disclosure on leases.]
(a) [Disclosures for lessees – finance leases liabilities]
Leasing arrangements – Commissioned public private partnerships New
AASB Interpretation 129.6 and 129.7
The Department entered into a 20 year public private partnership (PPP) arrangement with Project Co Pty Ltd on 21 December 2005. The project was initiated to develop a new Information Technology and Telecommunication (IT&T) system that increases the speed of internet connections in the State of Victoria. Upon completion of the construction, the system commenced operation on 1 July 2009. Under the arrangement, the portion of the total
payments to Project Co Pty Ltd that relates to Department’s right to use the assets are accounted for as finance leases liabilities, which are disclosed in the following table. In addition, until the end of this PPP arrangement, the Department pays Project Co Pty Ltd for the ongoing operation and maintenance of the system (refer to ‘public private partnerships’ of Note 31 Commitments for expenditure).
Revised The business unit of the Department, Gene Sciences Victoria also entered into a 30 year PPP with Rapid Processing Ltd on 15 May 2006 to develop a Biotech Research Centre. Upon completion of the construction, the research centre commenced operation on 15 July 2010.
Under the arrangement, the portion of the payments to Rapid Processing Ltd that relates to Department’s right to use the assets are accounted for as finance leases liabilities, which are disclosed in the following table. In addition, until the end of this PPP arrangement, the Department pays Rapid Processing Ltd for a standard level of service as part of the ongoing
AASB 117.31(e)(i)-(iii) AASB Interpretation 4.6
The other finance leases entered into by the Department relate to equipment with lease terms of six years. The Department has options to purchase the equipment at the conclusion of the lease agreements. Some leases provide for additional rent payments that are based on changes in a local price index.
[Insert further details on the leased assets to increase transparency where appropriate.]
Revised ($ thousand)
Minimum future lease
payments(i) Present value of minimum future lease payments
2013 2012 2013 2012
Commissioned PPP related finance lease liabilities
payable
Not longer than one year 3 415 8 606 2 845 7 172
Longer than one year but not longer than five years 960 2 356 800 1 963
Longer than five years 1 919 4 712 1 599 3 926
Other finance lease liabilities payable (ii)
Not longer than one year 1 463 3 688 1 220 3 074
Longer than one year but not longer than five years 1 440 3 534 1 200 2 945
Longer than five years 480 1 178 400 982
Minimum future lease payments 9 677 24 074 8 064 20 062
Less future finance charges (1 613) (4 012) .. ..
Present value of minimum lease payments 8 064 20 062 8 064 20 062
Included in the financial statements as:
Current borrowings lease liabilities (Note 23) .. .. 4 065 10 246
Non-current borrowings lease liabilities (Note 23) .. .. 3 999 9 816
.. .. 8 064 20 062
Notes:
(i) Minimum future lease payments include the aggregate of all base payments and any guaranteed residual.
(ii) Other finance lease liabilities include obligations that are recognised on the balance sheet; the future payments related to operating and lease commitments are disclosed in Note 31.
(b) [Disclosures for lessees – operating leases]
Refer to Note 31(c).
Note 30. Leases (continued)
(c) [Disclosures for lessors – finance leases]Leasing arrangements
AASB 117.47(f) Finance lease receivables relate to equipment with lease terms of five years. The lessees have options to purchase the equipment for a nominal amount at the conclusion of the lease agreements.
AASB 117.47(a)
AASB 117.47(b)
($ thousand)
Minimum lease
receivables(i) Present value of minimum lease receivables
(i) Minimum future lease payments receivable includes the aggregate of all lease payments receivable and any guaranteed residual.
Revised
AASB 117.47(c) In relation to the leasing arrangements above, there are unguaranteed residual values of $9 000 in 2012-13 ($24 000 in 2011-12) that were accrued to the benefit of the Department.
(d) [Disclosure for lessors – operating leases]
Leasing arrangements
AASB 117.56(c) Operating leases relate to the investment property owned by the Department with lease terms between five and 10 years, with an option to extend for a further 10 years. All operating lease contracts contain market review clauses in the event that the lessee exercises its option to renew. The lessee does not have an option to purchase the property at the expiry of the lease period.
AASB 117.56(a)
($ thousand)
2013 2012
Non-cancellable operating lease receivables
Not longer than one year 18 18
Longer than one year but not longer than five years 32 47
Longer than five years 22 25
72 90
AASB 7.31, 39(a) Maturity analysis of finance lease liabilities and the nature and extent of risk arising from finance lease liabilities are disclosed in Note 33.
AASB Interpretation
4.6 Determining whether an arrangement is, or contains, a lease shall be based on the substance of the arrangement and requires an assessment of whether:
(a) fulfilment of the arrangement is dependent on the use of a specific asset or assets (the asset); and
(b) the arrangement conveys a right to use the asset.
Contingent rentals
If there are future contingent rentals or future rentals relating to executory costs to be met by the lessees which are payable over the remainder of the lease term, they shall not be included as part of the minimum lease payments.
Classification of land and buildings leases
AASB 117.15A The amendment of AASB 117 by AASB 2009-5 removes the specific guidance on classifying land as an operating lease so that only the general guidance remains. The previous inclusion of the specific guidance resulted in a number of land and building leases being classified as operating and finance leases respectively. The removal of the specific guidance and assessment of land leases based on the general criteria may result in more land leases being classified as finance leases.
Sub leases
AASB 117.31(d) For non-cancellable sub leases, the total of future minimum leases payments expected to be received shall be disclosed.
Disclosure requirements
AASB 117.31(e) A general description about the lessee’s material leasing arrangements shall be disclosed, including:
(a) the basis on which contingent rent payable is determined;
(b) the existence and terms of renewal or purchase options and escalation clauses; and (c) restrictions imposed by lease arrangements such as those concerning dividends,
additional debt and further leasing.
Other disclosures
AASB 117.57 The disclosure requirements specified by the relevant standards in relation to property, plant and equipment, intangible assets, impairment of assets, investment property and agriculture apply to the lessor for assets provided under operating leases.
AASB Interpretation 4 Determining whether an Arrangement Contains a Lease requires the lessee to treat all payments under operating lease arrangement as lease payments for the purposes of complying with the disclosure requirements of AASB 117, but:
(i) disclose those payments separately from minimum lease payments of other arrangements that do not include payments for non-lease elements; and
(ii) state that the disclosed payments also include payments for non-lease elements in the arrangement.
An illustrative example of these disclosure items has not been given in the Model on the basis that such items would normally be incorporated into other existing notes, for example, Note 4 Income from transactions, Note 5 Expenses from transactions and Note 17 Property, plant and equipment.