We at Reachware always strive to provide the best and everything new in the world of technology and add our own mark in all the systems that we work with, and in order for us to provide services that suit the Saudi and Arab market, especially with international standards, we have developed
Lessor is “an entity that provides the right to use an asset for a period of time in exchange for consideration” for ex: if an organization owns a building and leases out the floor space to a tenant, the owner of the building would be considered the lessor.
Lessee is “ an entity that obtains the right to use an underlying asset for a period of time in exchange for consideration” for ex: if an organization leases a vehicle from a car dealership, the organization using the car would be considered a lessee.
Operating and Finance lease: the main difference between operating and finance leases for lessors under IFRS 16 is transfer of ownership. Lease agreements where the lessor maintains ownership are considered operating leases. For operating leases, the lessor continues depreciating their asset being leased and records the incoming lease receipts as revenue on a straight-line basis.
If the lease agreement is classified as a finance lease, the lessor will calculate the net investment in the lease using the present value of future expected lease payments and record this amount as a receivable.