238 WASCO BERHAD SECTION 6 FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2025 4 LEASES (CONTINUED) (b) Lease liabilities (continued) Recognition and measurement Lease liabilities are initially measured at the present value of the lease payments that are not paid at that date. The lease payments are discounted using interest rate implicit in the lease. If that rate cannot be readily determined, the lessee’s incremental borrowing rate is used. Subsequent to the initial recognition, the Group is exposed to potential future increases in variable lease payments that depend on an index or rate, which are not included in the lease liability until they take effect. When adjustments to lease payments based on an index or rate take effect, the lease liability is remeasured and adjusted against the right-of-use assets. The maturity analysis of the lease liabilities as at the reporting date is disclosed in Note 42. (c) Leases as a lessor Minimum lease receivables on investment properties and equipment are as follows: Group Company 2025 RM’000 2024 RM’000 2025 RM’000 2024 RM’000 Not later than 1 year 174 1,518 - - Later than 1 year and not later than 2 years 110 - - - Later than 2 years and not later than 5 years 88 - - - 372 1,518 - - Recognition and measurement The Group and the Company lease its investment properties under operating leases to non-related parties. The Group also leases its plant and equipment under operating leases to an associate. Leases of investment properties and equipment, where the Group and the Company retain substantially all risks and rewards incidental to ownership, are classified as operating leases. Rental income from operating leases is recognised in profit or loss on a straight line basis over the lease term. Contingent rents are recognised as revenue in the period in which they are earned. For the financial year, operating lease income from lease contracts in which the Group and the Company act as a lessor totalled RM1,402,000 (2024: RM3,700,000) and RM Nil (2024: RM963,000) respectively.
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