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Last updated: 6 February 2019 According to the research periodically carried out by the IFRS Foundation, IFRS are a basis for preparation of financial statements for (most) public interest entities in 144 jurisdictions. Therefore, it is safe to say that they are used all over the world, with a notable exception of the USA, which … Read more

Last updated: 20 January 2019 IFRS 16 introduces a few practical expedients at the date of its application and transition from IAS 17 as discussed below. Definition of a lease on initial application Entities are permitted not to reassess whether their contracts that are in force at the date of initial application of IFRS 16 … Read more

Last updated: 18 February 2020 Classification of leases Finance lease vs operating lease A lessor must classify each of its leases as either an operating lease or a finance lease (IFRS 16.61). This classification is based on the extent to which the lease transfers the risks and rewards resulting from ownership of an underlying asset. … Read more

Last updated: 22 December 2019 Statement of financial position Right-of-use assets and lease liabilities are presented separately in the statement of financial position or are disclosed in the notes. If the right-of-use assets are not presented separately, they should be included in the same line as is suitable for the underlying assets (IFRS 16.47-48). Profit … Read more

Last updated: 22 December 2019 A sale and leaseback transaction is a transaction where one entity (seller-lessee) transfers an asset to another entity (buyer-lessor) and leases that asset back from the buyer-lessor (IFRS 16.98). For each sale and leaseback transaction, the seller-lessee should determine whether the transfer of an asset is a sale. This should … Read more

Last updated: 22 December 2019 A lease modification is a change in the scope of a lease, or the consideration for a lease, that was not part of the original terms and conditions of the lease (IFRS 16.Appendix A). Examples of lease modifications are adding or terminating the right to use one or more underlying … Read more

Last updated: 28 February 2020 At the commencement date, a lessee (a customer) recognises a right-of-use (‘RoU’) asset and a lease liability (IFRS 16.22). RoU is an asset representing lessee’s right to use the leased asset during the lease term. Initial measurement of the right-of-use asset Components of the right-of-use asset The right-of-use (‘RoU’) asset … Read more

Last updated: 19 March 2020 Lease term comprises the following (IFRS 16.18): non-cancellable period of a lease, periods covered by an option to extend the lease – if the lessee (customer) is reasonably certain to exercise that option; and periods covered by an option to terminate the lease – if the lessee (customer) is reasonably certain … Read more

Last updated: 16 May 2020 Decision tree for identifying a lease At inception of a contract, an entity should assess whether the contract is, or contains, a lease. A contract is, or contains, a lease if the contract gives the right to control the use of an identified asset (‘underlying asset’) for a period of … Read more