Barclays 2012 Annual Report Download - page 273

The strategic report Governance Risk review Financial review Financial statements Risk management Shareholder information
Financial instruments held at amortised cost
The notes included in this section focus on 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 and borrowing. Detail regarding the Group’s capital and liquidity position can be found
on pages 162-186.
Accounting for financial instruments held at amortised cost
Loans and advances to customers and banks, customer accounts, debt securities and most 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.
19 Loans and advances to banks and customers
As at 31 December 2012
£m
2011
£m
Gross loans and advances to banks 40,530 47,491
Less: allowance for impairment (41) (45)
Loans and advances to banks 40,489 47,446
Gross loans and advances to customers 435,364 442,486
Less: allowance for impairment (9,635) (10,552)
Loans and advances to customers 425,729 431,934
Further analysis of the Group’s loans and advances to banks and customers and impairment allowances are included on pages 116-154.
20 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 assets 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
2012 2011
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 2,363 (329) 2,034 80 2,977 (437) 2,540 71
Over one year but not more than five years 5,055 (749) 4,306 105 6,333 (934) 5,399 122
Over five years 617 (120) 497 318 1,379 (320) 1,059 395
Total 8,035 (1,198) 6,837 503 10,689 (1,691) 8,998 588
The impairment allowance for uncollectable finance lease receivables amounted to £140m at 31 December 2012 (2011: £290m).
barclays.com/annualreport Barclays PLC Annual Report 2012 I 271