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    Ifas 2

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    Zohaib Hassan
    This standard outlines accounting requirements for Ijarah, an Islamic financing method similar to leasing. It defines key terms, covers recognition of income and expenses for both lessors and lessees, and addresses sale-and-leaseback transactions. The standard provides detailed rules for accounting for Ijarah agreements in accordance with Islamic finance principles.

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    Download as PPTX, PDF, TXT or read online from Scribd

    Ifas 2

    Uploaded by

    Zohaib Hassan
    14 views14 pages
    This standard outlines accounting requirements for Ijarah, an Islamic financing method similar to leasing. It defines key terms, covers recognition of income and expenses for both lessors and lessees, and addresses sale-and-leaseback transactions. The standard provides detailed rules for accounting for Ijarah agreements in accordance with Islamic finance principles.

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    IFAS-2

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    This standard outlines accounting requirements for Ijarah, an Islamic financing method similar to leasing. It defines key terms, covers recognition of income and expenses for both lessors and lessees, and addresses sale-and-leaseback transactions. The standard provides detailed rules for accounting for Ijarah agreements in accordance with Islamic finance principles.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    14 views14 pages

    Ifas 2

    Uploaded by

    Zohaib Hassan
    This standard outlines accounting requirements for Ijarah, an Islamic financing method similar to leasing. It defines key terms, covers recognition of income and expenses for both lessors and lessees, and addresses sale-and-leaseback transactions. The standard provides detailed rules for accounting for Ijarah agreements in accordance with Islamic finance principles.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    of 14

    Islamic Financial Accounting

    Standard (IFAS)
    IFAS 2-Ijarah
    IFAS 2- Ijarah
    Scope : The standard is applicable for
    Ijarah Accounting but shall not apply to
    • Lease agreements to explore for or use
    minerals.
    • Licensing agreements
    • Lessors of investment property leased out
    under operating lease
    • Lessors of biological assets leased out
    under operating lease.
    IFAS 2- Ijarah
    Definition : Ijarah is a contract
    whereby the owner of an asset,
    other than consumable, transfers its
    usufruct to another person for an
    agreed period for an agreed
    consideration.
    Cont.
    IFAS 2- Ijarah
    The term Ijarah for the purpose of this
    standard also includes a contract of sub-
    lease executed by the lessee with the
    express permission of the lessor.
    IFAS 2- Ijarah
    Commencement of Ijarah:
    Ijarah shall be effective from the date the
    asset is put into musta;jir’s possession
    pursuant to an Ijarah contract.
    IFAS 2- Ijarah
    Cancellation of Ijarah:
    • Upon the occurence of remote
    Contingency
    • With the mutual consent
    • If the musta’jir (lessee) enters into a new
    Ijarah for the same or an equivalent asset
    with the same muj’ir (lessor)
    IFAS 2- Ijarah
    Term of Ijarah:
    The term of Ijarah is the period for which the
    mustajir has contracted to lease the asset
    together with any further terms for which the
    mustajir has the option to continue to lease
    the asset, with or without payment, which
    option at the inception of the Ijarah it is
    reasonably certain the musta’jir will exercise.
    IFAS 2- Ijarah
    • Initial direct costs incurred specifically to
    earn revenues from an ljarah are either
    deferred and allocated to income over
    the ljarah term in proportion to the
    recognition of Ujrah, or are recognized as
    an expense in the income statement in
    the period in which they are incurred.
    IFAS 2- Ijarah
    Ijarah Accounting in the books of Muj’ir
    (Lessor) :
    • Muj’ir should present asset subject to
    Ijarah in their balance sheet according to
    the nature of the asset.
    • Ijarah Income from Ijarah should be
    recognized in incomeon accrual basis as
    and when the rental becomes due.
    Cont
    IFAS 2- Ijarah
    Ijarah Accounting in the books of Muj’ir
    (Lessor) : (cont)
    • Costs, including depreciation, incurred in
    earning the Ijarah income are recognized
    as an expense.
    • Asset leased out should be depreciated
    over the period of lease term using
    depreciation method set out in IAS 16
    IFAS 2- Ijarah
    Ijarah Accounting in the books of Muj’ir (Lessor) :
    (cont)
    The future Ijarah Payment in the aggregate and for
    each of the following period.
    • Not later than one year
    • Later than one year and not later than five years
    • Later than five year.
    • a general description of the muj’ir significant ijarah
    arrangements.
    IFAS 2- Ijarah
    Ijarah Accounting in the books of Lessee) :
    Ujrah payments under an Ijarah should be
    recognized as an expense in the income
    statement on a straight-line basis over the
    ljarah term unless another systematic basis is
    representative of the time pattern of the
    user’s benefit.
    IFAS 2- Ijarah
    Ijarah Accounting in the books of Mustaj’ir (Lessee) :

    The future Ijarah Payment in the aggregate and for each


    of the following period.
    • Not later than one year
    • Later than one year and not later than five years
    • Later than five year.
    • a general description of the muj’ir significant ijarah
    arrangements.
    IFAS 2- Ijarah
    Sale and lease Back:
    When an asset is sold with an intention to enter into an
    ljarah arrangement, any profit or loss based on the asset’s
    fair value should be recognised immediately. If the sale price
    is below fair value, any profit or loss should be recognised
    immediately except that, if the loss is compensated by
    future lease payments at below market price, it should be
    deferred and amortised in proportion to the lease payments
    over the period for which the asset is expected to be used. If
    the sale price is above fair value, the excess over fair value
    should be deferred and amortised over the period for which
    the asset is expected to be used

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