IFRS 16

Question 1

Recognition of Lease

Answer 1

Conveys Right to Control the u
Use of Identified Asset (R2C UOA) for a period of time in exchange for consideration

Question 2

How to assess R2C?

Answer 2

-right to substantially all asset’s economic benefits;
-direct use

Question 3

What is IFRS 16 exemption for recognising lease?

Answer 3

-allows for lease of less than 12 months ; or
-leases of low value

Question 4

If there is legal and contractual restrictions which limits use of asset, would it prevent from having right to direct use?

Answer 4

No, it would not prevent from having right to direct use

Question 5

Measurement of recognising lease (lessee)

Answer 5

Lease liability = PV of lease payments to be made, discounted using implicit rate

FC charged to P/L every end of reporting date and added to CA of LL

Lease payment shd deduct CA of LL and removed from P/L

ROUA = to initial value of LL + intial cost (incentives in nego lease)
- the, depr over lease term and charged to P/L