Please enable JavaScript.
Coggle requires JavaScript to display documents.
IFRS 16: LEASE - Coggle Diagram
IFRS 16: LEASE
Effective dates
- published in 1/2016
- applied in 1/1/2019
Objective
- This Standard sets out the principles for the recognition, measurement, presentation and disclosure of leases.
- The objective is to ensure that lessees and lessors provide relevant information in a manner that faithfully represents those transactions.
Scope
(a) leases to explore/use non-regenerative resources; (Thuê quyền khai thác hoặc sử dụng tài nguyên ks)
-
-
(d) licences of intellectual property granted by a lessor (Bằng sở hữu trí tuệ đc trao cho bên thuê)
-
Eg. motion picture films, video recordings, plays, manuscripts, patents and copyrights.
Recognition exemptions
- short-term leases (≤ 12 months, excluding asset buy option)
- leases for which the underlying asset is of low value, lease on each time (computer,…)
Lease term
= The non-cancellable period where a lessee has the right to use an underlying asset (TS thuê)) + periods to extend the lease (if certainly do so) + periods to terminate the lease (if certainly not do so)
Lessee (Bên đi thuê)
Recognition
At the commencement date, a lessee shall recognise
- a right-of-use asset and
- a lease liability.
Measurement
Initial measurement
ROU asset
a right-of-use asset is initially recognised at cost, including?
- amount of the initial measurement of the lease liability
- any lease payments less any lease incentives received
- any initial direct costs incurred by the lessee
- estimate of costs (incurred by the lessee) in dismantling and removing the underlying asset, restoring the site or the underlying asset, unless these costs incurred to produce inventories.
Lease liability
At the commencement date, a lessee shall measure the lease liability at the present value of the lease payments that are not paid at that date.
That present value is calculated based on which interest rate? => the interest rate implicit in the lease. If unavailable, use the lessee’s incremental borrowing rate. Lãi suất ngầm định trong HĐ, nếu k xác định đc thì dùng lãi suất biên đi vay
Subsequent measurement
SM of the ROU asset
After the commencement date, a lessee shall measure the right-of-use asset applying
- a cost model,
- unless it applies either of the measurement models described in paragraphs 34 and 35.
Cost model
To apply a cost model, a lessee shall measure the right‑of‑use asset at cost:
- (a) less any accumulated depreciation and any accumulated impairment losses; and
- (b) adjusted for any re-measurement of the lease liability specified in paragraph 36(c).
-
Impairment of asset
apply IAS 36
- to determine whether the ROU asset is impaired and
- to account for any impairment loss identified.
-
-
-
Presentation
either
present in SOFP
-
lease liabilities separately from other liabilities.
- not apply to ROU asset (investment property)
disclose in Notes
otherwise
ROU asset:
- include right-of-use assets within the same line item as that within which the corresponding underlying assets would be presented if they were owned
- disclose which line items in the statement of financial position include those right-of-use assets
-
SOPL/OCI
present interest expense on the lease liability separately from the depreciation charge for the right-of-use asset.
as IAS 1, p82(b) requires.
SOCF: classify
-
cash payments for the interest portion of the lease liability applying the requirements in IAS 7 for interest paid
short-term lease payments, payments for leases of low-value assets and variable lease payments not included in the measurement of the lease liability within operating activities
Disclosure
-
Requirements
- depreciation charge for right-of-use assets by class of underlying asset;
- interest expense on lease liabilities;
- the expense relating to short-term leases, low value assets and variable lease payments;
- income from subleasing ROU assets;
- total cash outflow for leases;
- additions to ROU assets;
- gains or losses arising from sale and leaseback transactions;
- the CA of ROU assets at the end of the reporting period by class of underlying asset.
-
-
Identifying a LEASE
Asset is specified at which time? at 2 points in time:
- The date of a lease agreement (explicitly specified in the contract)
- The time when the asset is made available for use by the customer. (implicitly specified)
When signing a lease agreement, can the lessee stop leasing that asset?
- Yes, they can. If so, they will lose the deposit money. (mất tiền cọc)
A supplier’s right to substitute an asset is substantive only if both of the following conditions exist: 2 conditions:
- practical ability to substitute alternative assets throughout the period of use (eg: customers can’t prevent) khả năng thực tế để thực hiện việc thay thế bằng tài sản khác trong suốt thời gian sử dụng
- benefit economically from the exercise of its right to substitute the asset đạt được lợi ích từ việc thay thể/từ việc sd
Each portion of an asset is an identified asset if it is physically distinct (for example, a floor of a building).
How to make the assessment of whether a contract is, or contains, a lease? It must be ‘Yes’ to 3 questions.
- Is there an identified asset?
- Does the lessee have the right to obtain substantially all of the economic benefits from use of the asset throughout the period of use? Consider paragraphs B21–B23.
- Does the lessee, the lessor, or neither party, have the right to direct how and for what purpose the asset is used throughout the period of use?
With a contract containing both lease element and other elements such as an asset lease and maintenance service provider, the lessee will gather all of the consideration based on
Stand-alone selling price => allocate consideration to each lease component based on + the relative stand-alone price of the lease component + the aggregate stand-alone price of the non-lease components
If an observable stand-alone price is not readily available, then allocate based on which price? - the estimated stand-alone price - by maximising the use of observable information
The assets which go hand in hand with the operation and existence of the main lease asset then should they be considered to be a separate asset in the contract?
No. Bc they have the close relationship with each other and the lessee can not obtain the economic benefits without these companying assets.
Lessor (Bên cho thuê)
Classification of lease
finance lease
-
- the lease transfers ownership of the underlying asset to the lessee by the end of the lease term;
- the lessee has the option to purchase the underlying asset at a price that is expected to be sufficiently lower than the fair value at the date the option becomes exercisable for it to be reasonably certain, at the inception date, that the option will be exercised;
- the lease term is for the major part of the economic life of the underlying asset even if title is not transferred;
- at the inception date, the present value of the lease payments amounts to at least substantially all of the fair value of the underlying asset;
- the underlying asset is of such a specialised nature that only the lessee can use it without major modifications.
Indicators
- if the lessee can cancel the lease, the lessor’s losses associated with the cancellation are borne by the lessee;
- gains or losses from the fluctuation in the fair value of the residual accrue to the lessee (for example, in the form of a rent rebate equaling most of the sales proceeds at the end of the lease);
- the lessee has the ability to continue the lease for a secondary period at a rent that is substantially lower than market rent.
operating lease
it does not transfer substantially all the risks and rewards incidental to ownership of an underlying asset
Lease classification is made at the inception date and is reassessed only if there is a lease modification.
Changes in estimates (for example, changes in estimates of the economic life or of the residual value of the underlying asset), or changes in circumstances (for example, default by the lessee), do not give rise to a new classification of a lease for accounting purposes.
Finance lease
Recognition
At the commencement date, a lessor shall
- recognise assets held under a finance lease in its SOFP and
- present them as a receivable at an amount equal to the net investment in the lease.
-
Subsequent measurement
A lessor shall recognise finance income over the lease term, based on a pattern reflecting a constant periodic rate of return on the lessor’s net investment in the lease.
Bên cho thuê phải ghi nhận doanh thu tài chính trong suốt thời hạn thuê để phản ánh tỷ suất sinh lời định kỳ cố định trên khoản đầu tư thuần trong hợp đồng thuê tài sản.
apply the lease payments relating to the period against the gross investment in the lease to reduce both the principal and the unearned finance income.
-
Operating lease
Recognition
- recognise lease payments from operating leases as income on either
- a straight-line basis or another systematic basis.
Depreciation policy: like normal, IAS 16+38
- Add initial direct costs incurred in obtaining an operating lease to the carrying amount of the underlying asset
- recognise those costs as an expense over the lease term on the same basis as the lease income.
-
Lease modifications
- as a new lease
- from the effective date of the modification
- considering any prepaid or accrued lease payments relating to the original lease as part of the lease payments for the new lease.
Presentation
- statement of financial position
- according to the nature of the underlying asset.
Disclosure
-
Requirements:
(+) for finance leases:
- selling profit or loss;
- finance income on the net investment in the lease; and (iii)
- income relating to variable lease payments not included in the measurement of the net investment in the lease.
- significant changes in the carrying amount of the net investment in finance leases.
- disclose a maturity analysis of the lease payments receivable
(+) for operating leases:
- lease income, separately disclosing income relating to variable lease payments that do not depend on an index or a rate.
-
apply the disclosure requirements in IAS 36, IAS 38, IAS 40 and IAS 41
-
leasing activities
- the nature of the lessor’s leasing activities;
- how the lessor manages the risk associated with any rights it retains in underlying assets.
-
Definition
- A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.
- The commencement date of the lease is The date on which a lessor makes an underlying asset available for use by a lessee.
- Inception date of the lease (inception date): The earlier of the date of a lease agreement and the date of commitment by the parties to the principal terms and conditions of the lease.
- Lease payments include? Payments made by a lessee to a lessor relating to the right to use an underlying asset during the lease term, comprising the following:
-
E.g: The fixed monthly house rental is 5m. Whether he lives there or not, the lessee still has to pay it fully.
-
E.g: they depend on an index or a rate, eg gold price or CPI,… The house rental depends on these.
- the exercise price of a purchase option if the lessee is reasonably certain to exercise that option
-
-
+ payments of penalties for terminating the lease, if the lease term reflects the lessee exercising an option to terminate the lease.
-