ifrs 16 exception for lessee

Question 1

what are some exception for lessee from ifrs 16

Answer 1

1.short term lease(less than 12 months)
2.low value asset( less than are equal to 5000$)

Question 2

what are short term lease exception?

Answer 2

1.purchase option

Question 3

what are low value item exception?

Answer 3

1.can give it on sublease
2. it is not low value item if, when it is new, its value was higher than 5000

Question 4

if a person opt for short term lease for one asset,is it necessary to apply ifrs 16 for whole class?

Answer 4

yes

Question 5

if a person opt for low value item for one asset,is it necessary to apply ifrs 16 for whole class?

Answer 5

no

Question 6

what are main component of a lease

Answer 6

right of use asset
specific asset
lease term
lease payments

Question 7

what is protective right

Answer 7

when use has some restriction,it does not mean lessee has no right of use asset

Question 8

is there lease if lessor has substitution right?

Answer 8

yes if it has non substantive substitution right

Question 9

what is specific asset

Answer 9

implicit explicit specific

Question 10

what is not substantive substitution rigjht

Answer 10

when lessor is not practically able to substitute asset or it is not profitable for him to substitute asset

Question 11

what is lease term?

Answer 11

non concellable period plus if lessee is reasonably certain to avail the option of extention period and to not avail the option of early exit option

Question 12

how can we know that a lessee is reasonabally certain?

Answer 12

1.check terms and condition of contract
2.if lessee has made improvements to the asset
3.if there are heavy penalty on termination of lease
4.if the asset is very important for lessee

Question 13

what will be the treatment of penalty on termination if lessee is reasonabally certain to avail early exit option

Answer 13

present value of penalty will be included in lease liablity and than it will be amortize till the end

Question 14

what will we lessee use if IRR of lessor is not given?

Answer 14

lessee will use it incremental borrowing rate

Question 15

what should a lessee used for depreciation of ROUA asset

Answer 15

useful life if 1. bargain purchase option
2.cumpolsary transfer occur
3.lessor will transfer asset at the end to
lessee

if not than lower of lease term or useful life

Question 16

what is ROUA

Answer 16

PV OF ALL PAYMENTS TO ALL PARTIES LESSOR,3RD PARTY

Question 17

What is lease payment

Answer 17

fixed rentals
in substance fixed rentals
varible rental due to index/rate
guaranteed contractual residual value if it is payment is expected
penalty on termination of lease
purchase option

Question 18

what is treatment of contingent rental on performance of lessee

Answer 18

it will be expensed out when it is due

Question 19

what is insubstance fixed rental

Answer 19

when there is no possiblity bof not occuring

Question 20

when a lessee do reassesment of lease?

Answer 20

1.change in lease term
2.change in awailing or not availing of purchase option
3.change in rentals due to cpi or index
4.change in payment of guanranted residual value

Question 21

in which cases a lessee will use new incremental borrowing rate and why while assesment?

Answer 21

1.change in lease term 2.change in availing of purchase option
reason is reassesment result in change in ecocnomic benifits

Question 22

what is key assumption in reassesment of lease due change in rentals?

Answer 22

once lease payment are adjusted for change in cpi then it will assume to remain constant for remaining term

Question 23

will we take into account of anticipated change in cpi for changre in rentals

Answer 23

no,we will only take into account chnage in rental due to actual change in cpi rate