WEEK 7 PC Flashcards
Lessee’s Point of View
IFRS 16 - leases recognized as an asset with a related lease obligation (pmts under the agreement)
Initial measurement of lesee’s Point of view
DR ROU asset
CR Lease liability
ROU asset is at cost and costs to restore to condition req etc.
Lease Liability: PV(future pmts)
it is the discount rate and if not that then the borrowing rate.
Lease Liability measurement IFRS 16
Fixed n variable pmts based on a rate, not those not known at inception, these are expensed
BPO = YES if expected to pay BPO - less than residual/fmv sometimes
Guaranteed Residual Value exp to be PAID only= fmv at end of lease
if no bpo or grv = 0
non lease components elected to be included
Subsequent measurement - ROU - IFRS 16
Uses cost = cost less acc. dep n impairment
Depreciation is leser of: lease term or asset’s useful life
if bpo exists then it is over useful life of asset
DR Dep expense
CR a/ depreciation
or
revaluation model
investment property = fair value model can be used
Subsequent measurement - Lease Liability - IFRS 16
when lease pmts are made, it is a reduction in the liability
DR Lease Liability
CR Cash
Interest Expense:
Beg: Ending balance of lease obligation less current yr pmt * interest rate;
End: balance before y/e pmt paid*interest rate
DR interest expense
CR lease liability
Lease Liability Remeasurement - IFRS 16
change in future lease pmts
hange is disounted and recog against asset n liability
Finance Lease - IFRS 16
Title transfers to lessee at end
A BPO exists n certain it will be exercised
lease term so that lessee receives all eco benefits
PV(minimum lease pmts) = FV (asset)
Derecognition
no residual guarantee = lease liability = nil = all pmts made
ROU be fully depreciated
DR A/c dep
CR ROU Asset
if residual guarantee -
dr a/ depreciation
cr rou asset
dr lease liability
dr/r g/l on lease dereognition\
cr cash
