20 years: Chartered accountant & educator
In IFRS 16 Leases Part I, Saket Modi explained what a lease was, service components that may accompany a lease, optional exemptions and leaseback transactions. In part II of this series, Modi will explain measurements of a right-of-use asset, lessor accounting, and how to measure lease liability.
In IFRS 16 Leases Part I, Saket Modi explained what a lease was, service components that may accompany a lease, optional exemptions and leaseback transactions. In part II of this series, Modi will explain measurements of a right-of-use asset, lessor accounting, and how to measure lease liability.
Subscribe to watch
Access this and all of the content on our platform by signing up for a 14-day free trial.
6 mins 24 secs
In this video, Saket outlines the measurement process for a right-of-use asset and the lease liability. The lessee recognises the right-of-use asset and lease liability at the commencement date. Additionally, a lessor classifies a lease as either a finance lease or an operating lease.
Key learning objectives:
How is the lease liability measured?
How is the right-of-use asset measured?
What could the subsequent measurement of the right-of-use asset be at?
What is a financial lease, and an operating lease?
Access this and all of the content on our platform by signing up for a 14-day free trial.
The lease liability is measured at the present value of lease payments not paid at that date. The payments should be discounted using the interest rate implicit in the lease, if that is not available, the lessee’s incremental borrowing rate.
Variable payments based on usage or performance of the underlying asset, for example, rent based on turnover are not included in measuring the lease liability. These are recognised as expenses in the relevant periods.
At the commencement date of the lease, the right-of-use asset is measured at:
A financial lease is one that transfers substantially all the risks and rewards incidental to ownership of an underlying asset.
In an operating lease, the assets transferred to the lessee continues to be recognised in the statement of financial position of the lessor and depreciated over its useful life. The rental income is recognised in the income statement.
Access this and all of the content on our platform by signing up for a 14-day free trial.
There are no available videos from "Saket Modi"