IFRS 16- Leases Flashcards
principles for the recognition, measurement, presentation and disclosure of leases.
The objective is to ensure that lessees and lessors provide relevant information in a manner that faithfully represents those transactions.
gives a basis for users of financial statements to assess the effect that leases have on the financial position, financial performance and cash flows of an entity.
Scope
all leases, including subleases of right-of-use assets,
Criteria for opting out:
- Lease less than 12mths must not have purchase option.
- leases for which the underlying asset is of low value.
Initial Measurement
, a lessee measures the right-of-use asset at cost, which includes the initial measurement of the lease liability, initial lease payments, direct costs, and estimated costs for asset restoration.
Subsequent Measurement:
he lessee can use a cost model unless other models are chosen. The right-of-use asset is depreciated, and impairment is assessed. Lease liability is measured by interest on the lease liability, lease payments made, and any reassessment or modifications.
Presentation:
Right-of-Use Assets and Lease Liabilities: These should be presented separately from other assets and liabilities unless they meet specific criteria.
Interest Expense and Depreciation: These should be presented separately in the statement of profit or loss and other comprehensive income.
Cash Flows: Cash payments for the lease liability should be classified within financing activities, interest payments within operating activities, and short-term lease payments within operating activities as well.
Disclosure:
- Disclose lease commitments
- Recognition and Measurement:
- Lessors classify leases as either finance or operating leases based on the transfer of risks and rewards incidental to ownership.
- : Disclose if a practical expedient regarding rent concessions due to COVID-19 is applied,
