IFRS 16 Flashcards
(38 cards)
What does IFRS 16 leases not apply to?
Non-regenerative resources
IAS 41
IFRS 15
IAS 38
What may a lessee elect to account for?
Lease payments as an expense on a straight-line basis over lease term
What happens with leases with a lease term of 12 months or less and containing no purchase options?
This election is made by class of underlying asset
Example where an election can be made on a leas-by-lease basis?
Leases where underlying asset has low value when new
When is a contract a lease?
Where it conveys the right to control use of an identified asset for a period of time in exchange for consideration
Where is control conveyed?
Where customer has both right to direct identified asset’s use
Obtain all economic benefits from that use
How is an asset typically identified?
By being explicity specified in a contract
Where a supplier has substantive right of substitution throughout period of use?
Customer does not have a right to use an identified asset
When is a supplier’s right of substitution only considered subtantive?
If supplier has both practical ability to substitute alternative assets throughout period of use and would economically benefit from substitution
When is a capacity portion of an asset still an identified asset?
If it is physically distinct
For a contract that contains a lease component and additional lease and non-lease components?
Lessees shall allocate consideration payable on basis of relative stand-alone prices
What may a lessee elect?
Account for all components as a lease
Interest rate implicit in the lease?
Interest rate that yields a present value of the lease payments and unguaranteed residual value
Lease payments and unguaranteed residual value must equal?
The fair value of the underlying asset
Initial direct costs of the lessor
What is the lease term?
Non-cancellable period for which a lessee has right to use an underlying asset
What is added on to the non-cancellable period?
Periods covered by an extension option and termination option
What is the lessee’s incremental borrowing rate?
Rate of interest a lessee has to pay to borrow funds necessary to obtain an asset similar to right-of-use asset
What happens upon lease commencement?
A lessee recognises a right-of-use asset and a lease liability
How is right-of-use asset initially measured?
Amount of lease liability + initial direct costs incurred by the lessee
When maya djustments to leases be required?
For lease incentives
What happens after lease commencement?
Shall measure right-of-use asset through cost model. Unless IAS 40 or IAS 16
Cost model for right-of-use asset?
Cost - accumulated depreciation - accumulated impairment
How is lease liabiltiy initially measured?
At PV of the lease payments payable over the lease term, discounted at rate implicit in lease if it can be readily determined
If rate can’t be determined in lease liaibility?
Use their incremental borrowing rate
