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Leases and hire purchase contracts

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UK Gaap

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Abstract

SSAP 21 broke new ground in UK financial reporting in that it was the first accounting standard to effectively require the application of the concept of substance over form. Through this, companies were required to capitalise assets in their balance sheets (together with the corresponding obligations) in prescribed circumstances — irrespective of the fact that legal title to those assets vested in another party.

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References

  1. SSAP 21, Accounting for leases and hire purchase contracts, August 1984, para. 14.

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  2. Ibid., para. 18.

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  3. Increased from £8,000 to £12,000 for contracts entered into after 10th March 1992.

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  4. ED 29, Accounting for leases and hire purchase contracts, October 1981.

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  5. Department of Trade, Inspectors’ Final Report on Court Line Limited, p. 153.

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  6. Ibid., Appendix J, p. 141.

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  7. Ibid., p. 153.

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  8. ASC, Guidance Notes on SSAP 21: Accounting for Leases and Hire Purchase Contracts, August 1984.

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  9. SSAP 21, Introductory paragraph.

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  10. Ibid., para. 15.

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  11. Ibid., para. 17.

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  12. Ibid., paras. 15 and 16.

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  13. Ibid., para. 25.

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  14. Ibid., para. 24.

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  15. ICAEW, Financial Reporting & Auditing Group, Technical Release FRAG 9/92, March 1992, para. 33.

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  16. SSAP 21, para. 20.

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  17. Ibid., para. 26.

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  18. Ibid., para. 19.

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  19. Ibid.

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  20. ICAEW, Technical Release 664, Implementation of SSAP 21 ‘Accounting for leases and hire purchase contracts’, July 1987, paras. 4 and 5.

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  21. ICAEW, FRAG 9/92, para. 35.

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  22. Ibid.

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  23. Ibid., para. 36.

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  26. Further examples are given at paras. 21 to 36 of the Guidance Notes on SSAP 21.

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  27. SSAP 21, para. 37.

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  28. Ibid., para. 57.

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  29. Ibid., para. 55.

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  30. Ibid., para. 53.

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  31. Ibid., para. 50.

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  32. Ibid.

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  33. Ibid., paras. 51 and 52.

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  34. Ibid., para. 56.

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  35. Ibid., para. 54.

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  37. Ibid., para. 8.

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  38. Ibid., para. 50(5).

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  39. Ibid., paras. 42 to 44.

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  40. Ibid., para. 48.

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  42. The Council of The Stock Exchange, The Stock Exchange Unlisted Securities Market, General Undertaking, para. 10(f).

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  45. Ibid., para. 43.

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  48. Ibid., para. 23.

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  50. Guidance Notes on SSAP 21, para. 92.

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  51. Ibid., para. 121. See Guidance Notes on ED 29: Accounting for Leases and Hire Purchase Contracts, ASC, October 1981, paras. 81–86 for an illustration of the difference that can arise in such circumstances.

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  52. SSAP 21, para. 39.

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  63. British Airways Plc, Offer For Sale by Hill Samuel & Co. Limited on behalf of The Secretary of State For Transport, January 1987.

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  64. Guidance Notes on SSAP 21, para. 38.

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  71. Ibid., para. 47.

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  72. Adapted from para. 122 of Guidance Notes on ED 29.

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  74. Ibid., para. 46.

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  80. Ibid., para. 49.

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  84. SFAS 13, Accounting for Leases, FASB, November 1976.

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  85. See the detailed US requirements relating to leases in FASB, Accounting Standards, Current Text, Volume I, General Standards as of June 1, 1991, FASB, 1991, Section L10, pp. 29141–29259.

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  86. IAS 17, Accounting for Leases, IASC, September 1982.

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  87. Ibid., para. 2.

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  91. Ibid., Appendix 3.

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Author information

Authors and Affiliations

  1. Ernst & Young, USA

    Mike Davies, Ron Paterson & Allister Wilson

Authors
  1. Mike Davies
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  2. Ron Paterson
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  3. Allister Wilson
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© 1992 Ernst & Young

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Davies, M., Paterson, R., Wilson, A. (1992). Leases and hire purchase contracts. In: UK Gaap. Palgrave Macmillan, London. https://doi.org/10.1007/978-1-349-12998-0_14

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