Accounting for managers

LEASING CONCEPT UNDER IFRS

VARSHINI S
SRN: PES1202102935
LEASING CONCEPT UNDER IFRS
MEANING OF IFRS: IFRS are
designed as a common global
language for business affairs so that
company accounts are
understandable and comparable
across international boundaries.
Definition of IFRS:IFRS is a set of
accounting standards developed by an
independent, not-for-profit organization
called the INTERNATIONAL ACCONTING
STANDARDS BOARD(IASB)
Why IFRS in INDIA?

• IMPROVE TRANSPARENCY IN ACCOUNTING

SYSYTEM
• NEW OPPORTUNITY
• GLOBALLY ACCEPTED
• ALLOWS EXERCISE OF PROFESSIONAL
JUDGEMENT
• INDIAN GAAP IS BECOMING RARE BECAUSE IT
HAS SOME LIMITATIONS IF WE COMPARE WITH
IFRS
points ifrs Indian gaap
Under IFRS Financial statement Comprises of Indian GAAP Comprises of Following financial
•Balance Sheet statements
Title of Financial
•Statement of Comprehensive Income •Balance sheet
statements
•Statement of Cash flow •Profit and Loss A/c
•Statement of Changes in Equity •Cash flow statement
Hedge transaction to be classified as a fair value
Hedge No guidelines for hedge accounting and
hedge or cash flow hedge. Specific guidance for
Accounting documentation
hedge accounting, documentation
Change in useful life and depreciation method is Change in depreciation method is considered a
Fixed Assets considered a change in accounting estimates and change in accounting policy and requires
applied prospectively retrospective re-computation of depreciation
Interest income to be recognized at the effectiveInterest income to be recognized on a time
Revenue
interest rate proportion basis
Indian GAAP requires extraordinary items to be
IFRS disallows the presentation of extraordinary
Extraordinary reported in the profit and loss statement of the
items in the statement of Comprehensive income
items entity distinct from the ordinary income and
or in the notes.
expenses for the period.
Change in the
Treated as a change in the accounting estimate and Treated as a change in the accounting policy and
depreciation
hence is accounted for prospectively. is accounted for
method
NUMBER LIST OF IFRS ISSUED
IFRS 1 First-time Adoption of International Financial Reporting Standards 2003
IFRS 2 Share-based Payment 2004
IFRS 3 Business Combinations 2004
IFRS 4 Insurance Contracts 2004
IFRS 5 Non-current Assets Held for Sale and Discontinued Operations 2004
IFRS 6 Exploration for and Evaluation of Mineral Assets 2004
IFRS 7 Financial Instruments: Disclosures 2005
IFRS 8 Operating Segments 2006
IFRS 9 Financial Instruments 2011
IFRS 10 Consolidated Financial Statements 2011
IFRS 11 Joint Arrangements 2011
IFRS 12 Disclosure of Interests in Other Entities 2011
IFRS 13 Fair Value Measurement 2011
IFRS 14 Regulatory Deferral Accounts 2014
IFRS 15 Revenue from Contracts with Customers 2014
IFRS 16 Leases 2016
IFRS 17 Insurance Contracts 2017
IFRS 16: LEASES

• IFRS 16 is an international financial reporting standard promulgated

by the international accounting standards board providing guidance
on accounting for leases
• It replaces the earlier leasing standard IAS 17
• The primary principle of IFRS 16 is all leases should be reported on
balance sheet
Objectives of IFRS 16
• To specify principles for the recognition, measurement, presentation
and disclosure of leases
• Ensuring that lessees and lessors provide relevant information that
faithfully represent those transactions
SCOPE OF IFRS 16
• IFRS 16 LEASES APPLIES TO ALL LEASES, INCLUDING SUBLESES EXCEPT
FOR:
❑LEASES TO EXPLORE FOR OR USE MINERALS, OIL, NATURAL GAS AND SIMILAR NON-
REGENERATIVE RESOURCES.
❑LEASES OF BIOLOGICAL ASSETS HELD BY A LESSEE.
❑SERVICE CONCESSION ARRANGEMENTS
❑LICENSES OF INTELLECTUAL PROPERTY GRANTED BY A LESSOR
❑RIGHTS HELD BY A LESSEE UNDER LICENSING AGREEMENTS FOR ITEMS SUCH AS FILMS, VIDEOS,
PLAYS, MANUSCRIPTS,PATENTS AND COPYRIGHTS WITHIN THE SCOPE OF IAS 38 INTANGIBLE
ASSETS
❑A LESSEE CAN ELECT TO APPLY IFRS 16 TO LEASES OF INTANGIBLE ASSETS, OTHER THAN THOSE
ITEMS LISTED ABOVE
THANK YOU