RECOGNITION

Question 1

What kind of leases are exempted from being recognised?

Answer 1

• Short-term leases
• Low value leases

Question 2

How is measured the lease liability? (components)

Answer 2

Fixed payments
+Certain variable payments
+Residual value guarantee
+Purchase/Termination Costs
-Previous payments

All components must be discounted using a rate.

Question 3

What are fixed payments?

Answer 3

Fixed payments are payments set in contract less lease incentives receivable.

Question 4

What is the residual value guarantee?

Answer 4

Is the incentive for lessee to maintain the asset in good condition.
It includes amounts lessee expects to make when asset returned.

Question 5

What are the purchase and termination costs?

Answer 5

Are the amounts that a lessee expects to pay to either purchase an underlying asset or to terminate a lease by exercising an option

Question 6

What types of variable payments are included in the initial measurement of the lease?

Answer 6

Included:
- Variable payment that depend on an index or a rate
- In-substance fixed payments

Not-included:
- Other variable payments: recognized in profit or loss

Question 7

How is measured the right-of-use asset? (components)

Answer 7

Lease liability
+Initial Direct Costs
+Costs of removal
+Costs to restore
+Previous Payments

Question 8

How is subsequently measured and accounted the lease liability? (components)

Answer 8

Initial value
+Interest on carrying value
-Lease payments
+Remeasurements

DR Right-of-use asset
CR Lease liability

Question 9

When are leases remeasured? How to account for the remeasurement?

Answer 9

Remeasurement of a lease is required when:
- There is a reassessment of options (ie . they are not likely/unlikely to be exercised when the opposite was considered at initial recognition); or
- The actual lease contract is modified with the lessor.

Remeasurements are accounted for prospectively; no restatement of previous figures

Question 10

Which are the measurement models for measure right-of-use asset?

Answer 10

• Cost model (IAS 16)
• Revaluation model (IAS 16)
• Fair value model Investment Property (IAS 40)

Question 11

How is measured the right-of-use asset with the cost model? (components)

Answer 11

Initial cost
-Accumulated amortisation
-Accumulated impairment
+Remeasurements

Question 12

How is measured the right-of-use asset with the Revaluation model? (components)

Answer 12

Fair value at revaluation date
-Accumulated amortisation
-Accumulated impairment
+Remeasurements

Question 13

How is measure the right-of-use asset with the Fair Value model?

Answer 13

The Fair value model can be used to measured the right-of-use asset only if the propery being leased meet the definition of investment property.

• If the fair value model has been selected for invesment property: then apply the fair value model toany leased investment property as well
• If the fair value model has not been selected for investment property: apply the cost model to any leased investment property as well.

Question 14

Is a contract with substitution rights for the supplier (lessor) a lease?

Answer 14

A contract with substantive substitution rights for the supplier is not a lease as the lessee has not obtained the economic benefits of the asset

A supplier’s right would be substantive if both of the following conditions are met
- The supplier has the practical ability to substitute alternative assets throughout the period of use

AND

• The supplier would benefit economically from the exercise of its right to substitute the asset