IFRS and US GAAP both stipulate that appropriate disclosures be made concerning operating and finance leases. Due to the differences between these types of leases, however, some of the disclosure requirements are dissimilar.

In the case of finance leases, IFRS requires the balance sheet to present finance lease obligations in the line items labeled “Debt.”

IFRS also requires certain disclosures to be made in the notes. The layout of disclosure notes on the debt will, however, vary across companies. Usually, the notes provide:

• a breakdown of the total debt reported on the balance sheet into two components: the amount of debt excluding finance lease obligations and the amount of finance lease obligations;
• disclosures on the component of on-balance-sheet debt, excluding finance lease obligations; and
• information about all the lease obligations of a company, both finance and operating leases, including the present and future value of minimum finance lease payments.

Even though operating leases and finance leases are both contractual obligations, only finance leases are reported on the balance sheet.

For operating leases, the disclosure notes will provide information on the commitments due to operating lease contracts i.e. the nominal value of the future minimum payments, and their maturity dates.