IFRS 16: Lessee (2024) Flashcards
Reassessment: Increase in Lease term [3]
- Identify new lease liability by finding PV of rentals using new rate.
- Compare with old lease liability.
- Difference would go to:
RoUA dr, LL cr
Vice versa for decrease (up to CA of RoUA, bal fig would go to PNL)
Reassessment: Adjustment of rentals against CPI
- Identify the new PV of LL using new rentals but OLD RATE.
- Compare this LL with old LL
- Difference would go to:
RoUA dr, LL cr
vice versa for decrease
Reassessment: Decided to exercise the purchase option [5]
- PV of revised cflows including p.options at NEW rate
- Compare with old LL
- RoUA dr, LL cr (diff)
- Depreciate RoUA over entire useful life
- LL amortized using new rate and term
Reassessment: decided not to purchase [5]
- PV of revised c/fs without purchase option at revised rate
- Compare with old LL
- LL dr, RoUA cr
- Depreciate RoUA over lease term
- Amortize LL over new term and new rate
Reassessment: Payment to be made as GRV [3]
- PV of LL using new rentals at old rate = new LL
- Compare with old
- Balance will go to RoUA
Modifications in lease agreement: when will profit/loss account be affected? [2]
- Reduction in lease term
- Reduction in asset base
Modification: Increase in asset base.
Market Rental on new asset [3]
- Treat the lease on new asset separate
- Use its own rentals, its own term, its own rate to find PV.
- Amortize and depreciate its LL/RoUA separately
Modification: Increase in asset base.
Not at market rental [4]
- Find new PV of combined LL using new rentals and new rate
- RoUA dr, LL cr
- Depreciate RoUA over remaining term
- Amortize LL using new rate over remaining term
Modification: Reduction in asset base. [4]
- Proportionately reduce LL and RoUA. (using simple arithmetic)
- By each reduction amount, book the following entry:
LL dr PNL (bal fig) dr, RoUA cr - Find new LL using new rental and new rate
- Find change between this new LL (4) and LL of remaining asset base and put this difference in RoUA.
RoUA dr, LL cr
Modification: Reduction in lease term. [5]
- Calculate LL using old rental, old rate but new lease term
- Compare this LL with old LL. = Reduction in LL (to be debited)
- Find reduction in RoUA by reducing the right forgone proportionately. (this would be credited)
- LL (2) dr, PNL (bal fig) dr, RoUA (3) cr
- Calculate new LL using new rentals, new rate, and new term and compare it with LL from (2). Take the change into RoUA
Modification: Increase in lease term or change in rentals [3]
- PV of LL using new rentals, rate, and term
- Compare with old LL
- Difference in RoUA
Modification: Reduction of asset base in future [5]
- Calculate CA of LL and RoUA normally up to the date of modification
- Break LL and RoUA into two parts. One pertaining to asset base to be reduced in future.
- Derecognize the right forgone of the respective RoUA (proportionately) and PV of lease liability of that particular asset base to be forgone using old rate but new term.
LL dr, PNL (dr), RoUA cr
4. Now find LL of this (to be terminated) asset using new rate. The change between (4) and (3) will go to RoUA
5. Find PV of LL of rest of the asset base using new rentals, rate, and term and put the change in ROUA
Double modification: Reduction in asset base and LT extend (3)
- Proportionately decrease the asset base (RoUA and LL and book PNL) or working of future reduction if that is the case
- Remaining assets’ PV of LL using new rate, rentals, and term
- Increase will go to RoUA
