ACCOUNTING

lOMoARcPSD|8949379




IFRS 16- leases example based summary


Financial accounting 300 (University of Pretoria)




StuDocu is not sponsored or endorsed by any college or university
Downloaded by Lexi Claasen ()

, lOMoARcPSD|8949379




IFRS 16- Leases
Lessor

Incidental lessor
Classification of leases (61)
- Finance lease

- Operating lease


1. Finance lease (63)
- Ownership transfers to lessee at end of lease term
- Option to purchase at price lower than FV
- Lease term = major part of economic life
- PV = FV at inception date
- Only lessee can use asset without major modification

Additional indicators
- If lessee cancels lease - losses by lessor due to cancellation are borne by the
lessee AND
- Changes in the fair value of the residual value accrues to the lessee AND
- lessee can extend the initial lease term for a secondary period at a rent that is
substantially lower than market related rentals


*If above criteria not met then lease is operating lease

Measurement and Recognition
Initial measurement
Lessor
n Non-cancellable lease period (consider option to extend/terminate)
PMT Fixed/variable/in substance fixed (only lease component)
FV  guaranteed +
 unguaranteed residual value or
 balloon payment or
 purchase option
PV  fair value at commencement date+
 initial direct costs of the lessor +
 lease incentives and reimbursed costs –
 deposits;
i ?




Downloaded by Lexi Claasen ()