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before we can discuss how a lessor would account for a lease under ifrs 16 we first need to understand how the lessor would classify the lease so a lessor can classify a lease in one of two ways its either a finance lease or an operating lease in the difference hinges on whether the lease transfers substantially all the risks and rewards of ownership to the lessee if it does then its a finance lease if it does not then its an operating lease im gonna go through all the details of how to account for finance leases and operating leases from the lessors perspective in the videos to come but just to give you a quick view a preview of why this is so important and why it affects the lessors accounting if its categorized as a finance lease then the ore is going to de-recognize the asset that is being leased lets say that its a truck right so theyre leasing some kind of a truck to the lessee that truck is going to be taken out of the its going to be taken off the statement of financi