Under TFRS 16 the distinction has largely disappeared for lessees, who recognise all leases on balance sheet except short-term and low-value leases. Lessors keep the classification; in a finance lease they recognise a receivable instead of the asset.
Source: TFRS 16
Related terms
Leases (TFRS 16)The standard requiring lessees to present almost all leases in the statement of financial position as a right-of-use asset and a lease liability.Right-of-use assetAn asset representing the lessee's right to use the leased asset over the lease term.Lease liabilityA liability measured as the present value of the lease payments to be made over the lease term.Accounting estimatesThe determination by management judgement of amounts that cannot be measured precisely, such as provisions, useful lives, expected credit losses and fair values.Accounting policiesThe specific principles, bases, conventions, rules and practices an entity applies in preparing its financial statements.Accrual basis of accountingThe principle of recording transactions as income, expenses, assets and liabilities in the period in which they occur, rather than when cash is received or paid.
Last updated: November 8, 2026 · This definition is for general information only.