BLM14030 - Lease accounting: finance lease accounting: finance lessors: net investment
This manual is being updated to reflect FRS 102 (2024 amendments). For guidance on the tax treatment of accounts prepared under IFRS 16 or the revised FRS 102, please refer to pages within the BLM50000 chapter.
This page will be archived at the end of February 2026.
Under both FRS102 and IAS 17, a lessor’s net investment in a lease is the gross investment in the lease discounted at the interest rate implicit in the lease.
The lessor’s gross investment in the lease is the aggregate of:
- the minimum lease payments receivable by the lessor under a finance lease, and
- any unguaranteed residual value accruing to the lessor.
Thus the lessor’s net investment is, in practice, broadly equivalent to the cost of the leased asset.