Operating Lease (Lessor)
Category
IFRS 16
An operating lease from the lessor's perspective is a lease that does not transfer substantially all the risks and rewards of ownership. The lessor retains the underlying asset on its balance sheet, continues to depreciate it, and recognizes lease income on a straight-line basis over the lease term.
Why it matters
Operating lease classification means the lessor keeps the asset and earns rental income, a fundamentally different economic model from finance leases. Lessor operating lease accounting remained largely unchanged from IAS 17 to IFRS 16 and from ASC 840 to ASC 842, but lessors must still properly classify each lease and make the required disclosures about their leasing activities and risk management.
How Arvexi handles this
Arvexi handles lessor operating leases by tracking the underlying asset, calculating straight-line lease income, and generating the periodic journal entries. The platform maintains the asset depreciation schedule alongside the lease income schedule, providing a complete view of the lessor's economics for each arrangement.