This standard shall apply to the accounting of all leases, excluding

02. This standard shall apply to the accounting of all leases, excluding:

Set-up-company-in-vietnam-Vinasc1a/ Lease contracts for exploiting or using natural resources, such as oil, gas, timber, metals and other minerals;

b/ Lease contracts for using copyrights of items such as motion picture films, video tapes, operas, copyrights and patents.

03. This standard shall apply also to the transfer of the right to use assets even when the lessors are requested to provide services mostly related to the operation, repair or maintenance of the leased assets. This standard shall not apply to service contracts not involving the transfer of the right to use assets.

04. The terms used in this standard are construed as follows:

A lease means an agreement between the lessor and the lessee whereby the lessor transfers the right to use an asset to the lessee for a certain period of time in return for a lease payment made in a lump sum or installments.

A financial lease is a lease whereby the lessor transfers most of the risks and rewards associated with the ownership over an asset to the lessee. The ownership over the asset may be transferred at the end of the lease term.

An operating lease is a lease other than a financial lease.

A non-cancelable lease contract is the one that the two involved parties cannot unilaterally terminate, except in the following cases:

a/ Upon the occurrence of unusual events, such as:

– The lessor fails to hand the leased asset on schedule;

– The lessee fails to make lease payments according to the provisions of the lease contract;

– The lessee or lessor breaches the contract;

– The lessee goes bankrupt or is dissolved;

Set-up-company-in-vietnam-Vinasc2– The guarantor goes bankrupt or is dissolved while the lessor rejects the lessee’s proposal on guaranty termination or substitute guarantor;

– The leased asset is lost or irreparably damaged.

b/ With the consent of the lessor;

c/ If the two parties enter into a new contract on lease of the same or similar asset;

d/ The lessee pays an additional amount immediately at the start of the lease.

The inception of the lease is the earlier date of either of the two dates: The date when the right to use the asset is transferred to the lessee and the date when the lease payment begins to be calculated under the provisions of the lease contract.

The lease term is the period of the non-cancelable lease contract plus (+) the duration for which the lessee have the option to continue leasing the asset as prescribed in the contract, with or without additional payment; this option is determined with relative certainty right at the inception of the lease.