3.2.4
Determining and allocating the consideration in the
contract – lessors ................................................................................. 1712
3.2.4.A
Determining the consideration in the contract ........ 1712
3.2.4.B
Allocating the consideration in the contract –
lessors ................................................................................ 1713
3.3
Contract combinations ....................................................................................... 1713
4 KEY CONCEPTS ............................................................................................ 1714
4.1
Inception date of the lease (inception date) ................................................... 1714
4.2 Commencement
date
of the lease .................................................................... 1714
4.3
Lessee involvement with the underlying asset before the
commencement date ........................................................................................... 1714
4.4
Lease term and purchase options ..................................................................... 1715
4.4.1
Cancellable leases ................................................................................ 1718
4.4.2
Reassessment of lease term and purchase options –
lessees .................................................................................................... 1719
4.4.3
Reassessment of lease term and purchase options –
lessors .................................................................................................... 1720
4.5
Lease payments ................................................................................................... 1720
4.5.1
In-substance fixed lease payments ................................................. 1720
4.5.2 Lease
incentives
...................................................................................
1721
4.5.3
Variable lease payments that depend on an index or rate ......... 1722
4.5.4
The exercise price of a purchase option ....................................... 1722
4.5.5
Payments for penalties for terminating a lease ............................. 1722
4.5.6
Amounts expected to be payable under residual value
guarantees – lessees only.................................................................. 1722
4.5.7
Amounts payable under residual value guarantees –
lessors only ........................................................................................... 1723
4.5.8
Amounts not included in lease payments – lessees only ........... 1723
4.5.9
Reassessment of the lease liability .................................................. 1724
4.5.10 Remeasurement by lessors ............................................................... 1724
4.6
Discount rates ...................................................................................................... 1724
4.6.1
Determination of the incremental borrowing rate by a
subsidiary with centralised treasury functions ............................. 1725
4.7
Initial direct costs ................................................................................................ 1726
4.7.1
Directly attributable costs other than initial direct costs
incurred by lessees ............................................................................. 1726
Leases (IFRS 16) 1687
4.8
Economic life ....................................................................................................... 1726
4.9 Fair
value .............................................................................................................. 1726
5 LESSEE ACCOUNTING ................................................................................. 1727
5.1
Initial recognition ............................................................................................... 1727
5.1.1
Short-term leases ................................................................................ 1727
5.1.2 Leases
of
low-value assets ................................................................ 1728
5.2
Initial measurement ............................................................................................ 1729
5.2.1
Right-of-use assets ............................................................................. 1729
5.2.2 Lease
liabilities
....................................................................................
1729
5.3
Subsequent measurement ................................................................................. 1730
5.3.1
Right-of-use assets ............................................................................. 1730
5.3.1.A
Cost model ...................................................................... 1730
5.3.1.B Other
measurement
models
.........................................
1731
5.3.2
Lease liabilities ..................................................................................... 1731
5.3.3 Expense
recognition
...........................................................................
1731
5.4
Remeasurement of lease liabilities .................................................................. 1733
5.5 Lease
modifications
............................................................................................ 1734
5.5.1
Determining whether a lease modification results in a
separate lease ...................................................................................... 1734
5.5.2
Lessee accounting for a modification that does not result
in a separate lease ............................................................................... 1734
5.6
Other lessee matters ........................................................................................... 1738
5.6.1
Impairment of right-of-use assets ................................................... 1738
5.6.2 Leases
denominated
in a foreign currency ................................... 1738
5.6.3 Portfolio
approach
.............................................................................
1739
5.6.4
Income tax accounting ...................................................................... 1739
5.7
Presentation ......................................................................................................... 1739
5.8 Disclosure .............................................................................................................. 1741
5.8.1
Disclosure objective ............................................................................ 1741
5.8.2
Disclosures of assets, liabilities, expenses and cash flows .......... 1741
5.8.3 Additional
disclosures ........................................................................ 1742
6 LESSOR ACCOUNTING ................................................................................. 1744
6.1
Lease classification ............................................................................................. 1744
6.1.1
Criteria for lease classification ......................................................... 1744
6.1.2
Lease classification test for land and buildings ............................. 1745
6.1.3
Residual value guarantees included in the lease
classification test ................................................................................. 1746
6.1.4
Reassessment of lease classification ............................................... 1746
6.2
Finance leases ...................................................................................................... 1746
6.2.1
Initial measurement ........................................................................... 1746
1688 Chapter 24
6.2.2 Manufacturer
or
dealer lessors ........................................................ 1747
6.2.3 Subsequent
measurement
.................................................................
1748
6.2.4
Remeasurement of the net investment in the lease .................... 1750
6.3
Operating leases .................................................................................................. 1750
6.4 Lease
modifications
............................................................................................ 1750
6.4.1
Determining whether a modification to a finance lease
results in a separate lease ................................................................... 1751
6.4.2
Lessor accounting for a modification to a finance lease
that does not result in a separate lease............................................ 1751
6.4.3
Modification to an operating lease .................................................. 1751
6.5
Other lessor matters ............................................................................................ 1751
6.5.1
Portfolio approach .............................................................................. 1751
6.6
Presentation ......................................................................................................... 1752
6.7 Disclosure ............................................................................................................. 1752
6.7.1
Disclosure objective ........................................................................... 1752
6.7.2 Disclosures
for
all lessors .................................................................. 1752
6.7.3
Disclosures for finance leases .......................................................... 1753
6.7.4
Disclosures for operating leases ...................................................... 1753
7 SUBLEASES ................................................................................................... 1753
7.1
Definition .............................................................................................................. 1753
7.2 Intermediate
lessor accounting ........................................................................ 1754
7.3 Sublessee
accounting
.........................................................................................
1756
7.4 Presentation ......................................................................................................... 1756
7.5 Disclosure ............................................................................................................. 1756
8 SALE AND LEASEBACK TRANSACTIONS ..................................................... 1756
8.1
Determining whether the transfer of an asset is a sale ................................ 1757
8.2
Transactions in which the transfer of an asset is a sale .............................. 1758
8.2.1
Accounting for the sale ...................................................................... 1758
8.2.2
Accounting for the leaseback ........................................................... 1758
8.2.3
Adjustment for off-market terms .................................................... 1759
8.3
Transactions in which the transfer of an asset is not a sale ....................... 1760
8.4 Disclosures ........................................................................................................... 1760
9 BUSINESS COMBINATIONS .......................................................................... 1761
9.1
Acquiree in a business combination is a lessee ............................................. 1761
9.2
Acquiree in a business combination is a lessor .............................................. 1761
10 EFFECTIVE DATE AND TRANSITION .......................................................... 1762
10.1 Effective date ....................................................................................................... 1762
10.2 Transition
.............................................................................................................
1762
Leases (IFRS 16) 1689
10.3 Lessee
transition ................................................................................................. 1762
10.3.1
Full retrospective approach ............................................................. 1763
10.3.2 Modified
retrospective
approach
.................................................... 1763
10.3.2.A
Leases previously classified as operating leases ...... 1763
10.3.2.B
Separating and allocating lease and non-lease
components of a contract upon transition –
leases previously classified as operating leases ....... 1767
10.3.2.C Leases
previously
classified as finance leases .......... 1767
10.4 Lessor transition .................................................................................................. 1768
10.4.1
Subleases .............................................................................................. 1768
10.5 Other considerations .......................................................................................... 1768
10.5.1
Sale and leaseback transactions ....................................................... 1768
10.5.2 Amounts previously recognised in a business combination ...... 1769
10.5.3 References
to IFRS 9 ......................................................................... 1769
10.6 Disclosure ............................................................................................................. 1769
List of examples
Example 24.1:
Implicitly specified as
set ................................................................... 1698
Example 24.2:
Identified asset – implicitly specified at the time the asset
is made available for use by the customer ..................................... 1698
Example 24.3:
Identified asset – physically distinct portion of a larger
asset ....................................................................................................... 1699
Example 24.4:
Identified asset – capacity portion of an asset ............................. 1699
Example 24.5:
Substitution rights ............................................................................... 1701
Example 24.6:
Right to direct the use of an asset ................................................... 1705
Example 24.7:
Identifying and separating lease components ............................... 1707
Example 24.8:
Activities that are not components of a lease contract ............... 1709
Example 24.9:
Allocating contract consideration to lease and non-lease
components – lessees ......................................................................... 1711
Example 24.10:
Lessee allocation of consideration to lease and non-lease
components of a contract (IFRS 16 Example 12) ........................... 1711
Example 24.11:
Determining the lease term ............................................................... 1717
Example 24.12:
Cancellable leases ................................................................................ 1719
Example 24.13:
Variable lease payment that depends on an index or rate ......... 1722
Example 24.14:
Residual value guarantee included in lease payments ................ 1723
Example 24.15:
Variable lease payments which do not depend on an index
or rate .................................................................................................... 1724
Example 24.16:
Short-term lease ................................................................................. 1728
Example 24.17:
Lessee accounting .............................................................................. 1732
1690 Chapter 24
Example 24.18:
Lease modifications (IFRS 16 Illustrative Examples 15 to
19) ........................................................................................................... 1735
Example 24.19:
International GAAP® 2019: Generally Accepted Accounting Practice under International Financial Reporting Standards Page 333