need to know / leases - project update - BDO International
need to know / leases - project update - BDO International
need to know / leases - project update - BDO International
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LEASES - A PROJECT UPDATE<br />
25<br />
TRANSITION<br />
The transitional requirements would apply at the beginning of the earliest comparative period presented.<br />
Lessees<br />
The lease was accounted for as<br />
Finance lease<br />
Operating lease<br />
Operating or finance<br />
Transition<br />
No adjustments <strong>to</strong> carrying amounts.<br />
Reclassify lease assets and lease liabilities as right-of-use assets and liabilities<br />
<strong>to</strong> make lease payments.<br />
Recognise liabilities measured at the present value of the remaining lease<br />
payments, discounted using the lessee’s incremental borrowing rate as<br />
of the effective date for each portfolio of <strong>leases</strong> with reasonably similar<br />
characteristics.<br />
Recognise right-of-use assets equal <strong>to</strong> the proportion of the liability <strong>to</strong> make<br />
lease payments at lease commencement calculated on the basis of the<br />
remaining lease payments. For the straight-line approach, measure the righ<strong>to</strong>f-use<br />
asset at the same amount as the liability <strong>to</strong> make lease payments.<br />
Record <strong>to</strong> retained earnings any difference between the liabilities and the<br />
right-of-use assets at transition.<br />
When lease payments are uneven over the lease term, a lessee would adjust<br />
the right-of-use asset by the amount of any recognised prepaid or accrued<br />
lease payments.<br />
Lessor<br />
The lease was accounted for as<br />
Finance lease<br />
Operating lease<br />
Operating or finance<br />
Transition<br />
No adjustments <strong>to</strong> carrying amounts.<br />
Recognise a receivable, measured at the present value of the remaining lease<br />
payments, discounted using the rate charged in the lease determined at the<br />
date of commencement of the lease, subject <strong>to</strong> any adjustments required <strong>to</strong><br />
reflect impairment.<br />
Recognise a residual asset consistent with the initial measurement of the<br />
residual asset under the receivable and residual approach, using information<br />
available at the beginning of the earliest comparative period presented.<br />
Derecognise the underlying asset.<br />
When lease payments are uneven over the lease term, adjust the cost basis<br />
in the underlying asset that is derecognised presented by the amount of any<br />
recognised prepaid or accrued lease payments.
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