Search results
Variable lease payments that depend on an index or a rate described in paragraph 27(b) include, for example, payments linked to a consumer price index, payments linked to a benchmark interest rate (such as LIBOR) or payments that vary to reflect changes in market rental rates.
Under IFRS 16, the lease payments for the purpose of the lease accounting consist of: Fixed lease payments less any lease incentives; Variable lease payments depending on an index or a rate; Exercise price of a purchase option (if the lessee will exercise it); and. Penalties for terminating the lease (if the lessee will terminate).
The new leases standard, MFRS 16: Leases provides guidance on how to account for variable lease payments in a lease agreement. For accounting by lessees, MFRS 16 categorises variable lease payments into two categories, i.e. those that depend on an index or a rate; and those that do not depend on an index or a rate.
2.2.2 Lease payments IFRS 16.27 A lessee includes the following payments relating to the use of the underlying asset in the measurement of the lease liability: – fixed payments (including in-substance fixed payments), less any lease incentives receivable; – variable lease payments that depend on an index or a rate;
– variable lease payments that depend on an index or rate (see Chapter 3 ); and – fixed payments (including in-substance fixed payments (see Section 4.2)), less
IFRS 16 – An overview: The new normal for lease accounting. Download. Handbook. Core concepts. Ongoing application. Sector-specific. In-depth application guidance on the new leasing standard.
applying IFRS 16. Identifying a lease (paragraphs 9–11 and B9–B30) The following examples illustrate how an entity determines whether a contract is, or contains, a lease. Example 1—Rail cars. Example 1A: a contract between Customer and a freight carrier (Supplier) provides Customer with the use of 10 rail cars of a particular type for ...
