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Good day sir,
I would like to ask:
1. since the IFRS 16 introduces that all leases
(operating lease or finance lease) should be recognised into assets and liabilities as long as the term of lease is more than 12 months. Therefore, may I ask will the leases (operating or finance lease) that under non-currenct liability go into the calculation of gearing ratio??
If yes, is that means leases will increase the gearing level ?2. How are we going to identify the lease asset is considered as small value assets ? Does printing machinery that worth $2 million considered as small value asset? OR it should be considered as long term lease?
3. Does lease considered as debt financing?? If not, it fall into what type of finance?
Thanksss
Hi,
1) Yes the lease liability is interest bearing so would be included within the gearing ratio, with both current and non-current elements being included.
2) It will be judgmental and will be take into consideration the value of assets currently held plus potentially materiality. I doubt a $2m bit of machinery would be small value.
3) Yes the lease is a form of debt financing due to the interest.
Thanks
under the ifrs16 new standard, does we still separate the lease into two different name (finance lease and operating lease) OR we just use one name called finance lease since the accounting treatment is the same?
Hi,
There is no such thing anymore as a finance or operating lease under lessee accounting. All leases are recognised on the SFP unless it is a short-life/low value asset.
Thanks
Good day.
What’s the effect of having a deposit given in the question, on the calculation of right-of-use-asset and PV of lease liability? ‘In both scenarios, payment in advance and payment in arrears’
Thank you in advance!
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