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(b) Lease commitments: Group as lessee (continued)
(c) Lease commitments: Group as the lessor
The Group has entered into various property leases with terms of the lease ranging from one year
to indefinite. The future minimum lease payments receivable under operating leases are as follows:
Consolidated
2017
$000
2016
$000
Commitments in relation to leases contracted for at the end of
each reporting period but not recognised as assets, receivable:
Within one year
6,198
6,058
Later than one year but not later than five years
9,195
8,650
Later than five years
9,450
9,302
24,843
24,010
Accounting policy
Leases - Group as a Lessee
Leases of property, plant and equipment where the Group, as lessee, has substantially all the risks
and rewards of ownership are classified as finance leases. Finance leases are capitalised at the
lease’s inception at the fair value of the leased property or, if lower, the present value of the minimum
lease payments. The corresponding rental obligations, net of finance charges, are included in other
short term and long term payables. Each lease payment is allocated between the liability and finance
cost. The finance cost is charged to profit or loss over the lease period so as to produce a constant
periodic rate of interest on the remaining balance of the liability for each period. The property, plant
and equipment acquired under finance leases is depreciated over the asset’s useful life or over the
shorter of the asset’s useful life and the lease term if there is no reasonable certainty that the Group
will obtain ownership at the end of the lease term.
Leases in which substantially all the risks and rewards of ownership are not transferred to the Group
as lessee are classified as operating leases. Payments made under operating leases (net of any
incentives received from the lessor) are charged to the consolidated income statement on a straight
line basis over the period of the lease.
Accounting policy
Group as a lessor
Leases in which the Group retains substantially all the risks and benefits of ownership of the leased
asset are classified as operating leases. Initial direct costs incurred in negotiating an operating lease
are added to the carrying amount of the leased asset and recognised as an expense over the lease
term on the same basis as rental income.
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NOTE 14
COMMITMENTS (CONTINUED)