Professional Documents
Culture Documents
Ifrs 16
Ifrs 16
Leases to explore for / use of minerals, oil, natural gas and similar
Leases of biological assets (IAS 41) Service concession arrangements (IFRIC 12)
Intellectual property licenses (IFRS 16) Rights under licensing agreements (IAS 38)
=> contract that conveys the right to use an asset for a period of time
in exchange for consideration M TER
M ENTS LEAS
E
Y
LEA SE PA
asset
consideration
=> contract that conveys the right to use an asset for a period of time
in exchange for consideration
ptio n
nc e
ei
At th
= throughout the period of use, the customer has both of the following rights
to the identified asset:
Economic benefits
= throughout the period of use, the customer has both of the following rights
to the identified asset:
Explicitly Implicitly
The lessee can benefit from The asset is NOT highly dependent on or
the use of asset interrelated with other assets in the contract
- 4-year contract
- Monthly: CU 10 000 Rent of equipment Maintenance Admin
=> Allocate CU 480 000 to rent and maintenance based on relative stand-alone prices
=> LESSEES do not need to separate if they elect not to
✔ Fixed payments (also in-substance fixed payments) less any lease incentives
AT THE COMMENCEMENT
AT THE COMMENCEMENT
Lessor Lessee
=> Interest rate implicit in the lease (IRR) => Interest rate implicit in the
lease (IRR) (difficult to determine)
constant periodic
Debit: Credit: interest rate
P/L-Depreciation ✔ Interest on the LL
ROU-Accumulated
Ex. depr
Complications
Variable lease
payments
NO
S
YE
Complications
= incremental costs of obtaining a lease that would NOT have been incurred without the lease
(except for manufacturer or dealer lessors)
Lease modifications
= change in the scope, or consideration that was NOT part of original terms
NO
Are the rights added to the lease contract to LEASE MODIFICATION
use one or more underlying assets?
YES
=
LEASE MODIFICATION =
SEPARATE LEASE
11/23/2023 The Hisab
Leases: Accounting by lessees
Lease modifications
= change in the scope, or consideration that was NOT part of original terms
Lessee accounts:
Presentation:
✔ Present right-of-use asset separately from other assets => Or disclose in the notes
✔ Present lease liabilities separately from other liabilities
✔ Present interest on the lease liability separately from depreciation of ROU asset
✔ Cash flows:
Presentation:
✔ In tabular format
Disclosures
(a) depreciation charge for right-of-use assets by class of underlying asset;
(b) interest expense on lease liabilities;
(c) the expense relating to short-term leases;
(d) the expense relating to leases of low-value assets;
(e) the expense relating to variable lease payments not included in the measurement of lease
liabilities;
(f) income from subleasing right-of-use assets;
(g) total cash outflow for leases;
(h) additions to right-of-use assets;
(i) gains or losses arising from sale and leaseback transactions; and
(j) the carrying amount of right-of-use assets at the end of the reporting period by class of underlying asset
In preparing the maturity analyses, an entity uses its judgment to determine an appropriate number of time
bands.
(a) not later than one month;
(b) later than one month and not later than three months;
(c) later than three months and not later than one year; and
(d)
11/23/2023 later than one year and not later than five years.
The Hisab
Accounting by lessors:
Classification of Leases
RISKS REWARDS
NO
S
YE
Indicators: If lessee can cancel the lease → lessor’s losses are borne by lessee
Gains or losses from fluctuation accrue to the lessee
Lessee can continue the lease for secondary period at rent < market
rent
Separate classification
LAND BUILDING
AT THE COMMENCEMENT
DEBIT: CREDIT:
Lease Receivable PPE
AT THE COMMENCEMENT
✔ Revenue on straight-line (or other) basis ✔ Initial direct costs are added to the asset
✔ Depreciation
Original lessee
Lessor Head lease Sublease Lessee
Intermediate lessor (sub-lessee)
Sells an asset
LEASE !!!
✔ In tabular format
= retrospectively to each prior reporting period = retrospectively with cumulative effect at the
date of initial application
✔ No need to reassess whether contract ✔ Comparatives presented under prior IFRS
is/contains a lease at the date of initial application
(if IAS 17/IFRIC 4 applied) ✔ IFRS 16 applied to existing and new contracts
onwards
✔ Adjustment to opening retained earnings