T12 Leases Flashcards
What are the two sides of a lease?
Asset and liability, We have to rights to use the asset and have a liability to pay.
What is Initial Recogniton?
Present value of the future lease payments.
What is Subsequent Measurement?
When we depreciate the asset side and the liabilities side depends if you pay in advance or in arrears
What happens to the liability side if we pay lease payments in advance.
Y1 = Initial Recognisition and we start payments as soon as the the lease starts and we remove the payments from the lease liability before adding interest.
What do we do at the year end to prepare for the brought forward?
Split the lease between one year and over one year.
What happens to the liability side if we pay lease payments in arrears.
When the lease starts but we don’t pay until the end of the year. We have to add interest first as we have incurred a whole year of interest without paying
How to calculate the Lease split when the paymenst are in arrears?
Calculate the year after because the interest messes with the split calculation. The carry forward amount of the year after is the after one year amount for the current year.
