10 A lease is an agreement whereby the lessor conveys to the lessee (the Organization), in return for a payment or series of payments, the right to obtain substantially all the economic benefits of an asset, and the right to direct the use of the asset, for an agreed period of time. 20 Due to accounting and reporting implications imposed on an organization when entering a lease agreement, each Office (RO/BFO and HQ/ACT/OSS) is required to keep a record of any lease agreement covering equipment, office space, warehousing, accommodation and vehicle leases, and to share a copy with HQ/OSS, who will manage the processing and accounting. 30 As lessee, WHO recognizes both a right of use asset (RoU) and a corresponding lease liability for leases that meet the WHO IPSAS criteria for recognition. 40 Where lease agreements include up-front payments for fit-out or pre-occupancy work WHO evaluates whether these costs qualify as leasehold improvements. 50 Short term and low-value leases below US $20,000 (where the value can be readily determined), are recognized as an expense on a straight-line basis over the lease term. 60 WHO distinguishes between strategic and non-strategic leases, based on the operational importance of the underlying premises. 70 Strategic leases include Regional, Country and Liaison Offices, and certain Technical Offices considered essential to WHO's long term presence and continuity of critical operations. 80 RoU assets are carried at cost less accumulated depreciation and impairment and recognized under finance revenue/cost. 90 Lease liabilities are increased by interest and reduced by lease payments and re-measured to reflect any lease modifications or reassessments
100 Interest expense on lease liabilities is recognized under finance revenue/cost. Payments for short-term, low-value leases and variable lease payments are recognized as expenses 110 Where WHO is the lessor: Lease revenue from operating leases is recognized as revenue on a straight-line basis over the lease term. All costs associated with the asset incurred in earning the lease revenue, including depreciation, are recognized as an expense. 120 Lease revenue that is earned but not yet received is recognized as a receivable when the revenue is accrued.
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