BLM20225 - Defining long funding leases: the three tests: the lease payments test: CAA01/S70O
»Ê¹ÚÌåÓýapp lease payments test is one of the two main tests that may result in operating leases being classified as long funding leases. »Ê¹ÚÌåÓýapp other is the useful economic life test, BLM20255.
»Ê¹ÚÌåÓýapp lease payments test is met when the present value (BLM20235) of the minimum lease payments (BLM20230) is equal to or more than 80 per cent of the fair value of the asset (BLM20245).
»Ê¹ÚÌåÓýapp lease payments test means that a lease which does not meet the indicative 90% test in SSAP 21 (BLM11200) may be a long funding lease. »Ê¹ÚÌåÓýappre is no similar 90% test in IAS 17 (BLM11205).
This test applies whether the lease is accounted for as a finance lease, loan or operating lease.