The classification of leases is based on the extent to which the risks and rewards incidental to ownership of the leased item lie with the lessor or the lessee. PZU Group companies are parties to lease agreements, both as lessors and as lessees.
47.1.1 Finance leases
In the case of lease agreements under which substantially all risks and rewards incidental to ownership of a leased asset are transferred, it stops being recognized in the lessor’s balance sheet. Instead the lessor recognizes a receivable in an amount equal to the present value of minimum lease payments, which are then divided between interest income and decrease in the balance of receivables.
47.1.2. Operating leases
Operating lease agreements pertain primarily to real property.
Lease payments under operating leases are recognized in the profit and loss account as income using the straight line method throughout the term of the lease.