Page 56 - Nanyang Technological University

NOTES TO FINANCIAL STATEMENTS
(cont’d)
31 March 2016

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)
2.15 Lease payments
Payments made under operating leases are recognised in the profit or loss on a straight-line basis over the term

of the lease. Lease incentives received are recognised as an integral part of the total lease expense, over the
term of the lease.
Determining whether an arrangement contains a lease
At inception of an arrangement, the Group determines whether such an arrangement is or contains a lease. A
specific asset is the subject of a lease if fulfilment of the arrangement is dependent on the use of that specified
asset. An arrangement conveys the right to use the asset if the arrangement conveys to the Group the right to
control the use of the underlying asset.
At inception or upon reassessment of the arrangement, the Group separates payments and other consideration
required by such an arrangement into those for the lease and those for other elements on the basis of their
relative fair values. If the Group concludes for a finance lease that it is impracticable to separate the payments
reliably, then an asset and a liability are recognised at an amount equal to the fair value of the underlying asset.
Subsequently, the liability is reduced as payments are made and an imputed finance charge on the liability is
recognised using the Group’s incremental borrowing rate.

2.16 Prepaid lease
Prepaid lease is recognised in the statement of financial position and amortised to profit or loss on a straight-line

basis over the term of the lease.

2.17 Finance lease receivables
Assets held under finance lease are recognised in the statement of financial position and presented as receivables

net of unearned interest and after deduction of allowance for possible losses.

2.18 Key management personnel
Key management personnel of the Group are those persons having the authority and responsibility for planning,

directing and controlling the activities of the entity. The Board of Trustees and senior management team are
considered as key management personnel of the Group.

54 NTU ANNUAL REPORT 2016