Barclays 2011 Annual Report Download - page 240

Notes to the financial statements
For the year ended 31 December 2011 continued
Financial instruments held at amortised cost
This section contains information about assets that are held at amortised cost arising from the
Group’s retail and wholesale lending including loans and advances, finance leases, repurchase
and reverse repurchase agreements and similar secured lending. For more information about the
Group’s funding and liquidity position, see Liquidity risk and Capital risk on pages 139 to 150 and
pages 130 to 138.
Accounting for financial instruments held at amortised cost
Loans and advances to customers and banks, customer accounts, debt securities and the majority of other financial liabilities, are held at amortised
cost. That is, the initial fair value (which is normally the amount advanced or borrowed) is adjusted for repayments and the amortisation of coupon,
fees and expenses to represent the effective interest rate of the asset or liability.
21 Loans and advances to banks and customers
As at 31 December 2011
£m
2010
£m
Gross loans and advances to banks 47,491 37,847
Less: allowance for impairment (45) (48)
Loans and advances to banks 47,446 37,799
Gross loans and advances to customers 442,486 440,326
Less: allowance for impairment (10,552) (12,384)
Loans and advances to customers 431,934 427,942
Further disclosures relevant to the Group’s loans and advances to banks and customers are included on pages 79 to 120.
22 Finance leases
Accounting for finance leases
The Group applies IAS 17 Leases in accounting for finance leases, both where it is the lessor or the lessee. A finance lease is a lease which confers
substantially all the risks and rewards of the leased asset on the lessee. Where the Group is the lessor, the leased asset is not held on the balance
sheet; instead a finance lease receivable is recognised representing the minimum lease payments receivable under the terms of the lease,
discounted at the rate of interest implicit in the lease. Where the Group is the lessee, the leased asset is recognised in property, plant and equipment
and a finance lease liability is recognised, representing the minimum lease payments payable under the lease, discounted at the rate of interest
implicit in the lease.
Interest income or expense is recognised in interest receivable or payable, allocated to accounting periods to reflect a constant periodic rate of return.
Finance lease receivables
Finance lease receivables are included within loans and advances to customers. The Group specialises in asset-based lending and works with a broad
range of international technology, industrial equipment and commercial companies to provide customised finance programmes to assist
manufacturers, dealers and distributors of assets.
Investment in finance lease receivables 2011 2010
Gross
investment
in finance
lease
receivables
£m
Future
finance
income
£m
Present
value of
minimum
lease
payments
receivable
£m
Un-
guaranteed
residual
values
£m
Gross
investment
in finance
lease
receivables
£m
Future
finance
income
£m
Present
value of
minimum
lease
payments
receivable
£m
Un-
guaranteed
residual
values
£m
Not more than one year 2,977 (437) 2,540 71 3,440 (479) 2,961 60
Over one year but not more than five years 6,333 (934) 5,399 122 7,200 (1,058) 6,142 123
Over five years 1,379 (320) 1,059 395 1,591 (340) 1,251 560
Total 10,689 (1,691) 8,998 588 12,231 (1,877) 10,354 743
The impairment allowance for uncollectable finance lease receivables amounted to £290m at 31 December 2011 (2010: £351m).
238 Barclays PLC Annual Report 2011 www.barclays.com/annualreport