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On 1 November 20X8, Burford made an upfront payment in full of $45,000 for a nine-month lease of a piece of equipment. Burford’s year end is 31 December 20X8. The company wishes to take advantage of any available recognition exemptions in IFRS 16 Leases.
Assuming Burford applies any permitted exemption, what amount would be charged to Burford’s statement of profit or loss for the year ended 31 December 20X8 in respect of this transaction?
Hi,
I think that you need to recognise an expense for November and December as you would be taking advantage of the simplified treatment for short leases.
Thanks,
Sir, i know short-term leases are accounted for by being expensed to the statement of profit or loss. But i do not understand the english used in the question. Could you explain it in a way that if such a question was asked in a different way, we would not be startled?
You would have to give me a specific scenario/question so that I can help you understand it further. If it states that the company wishes to take the exemption granted in IFRS 16 then it is effectively saying that it is a short-term lease.
Thanks
On 1 November 20X8, Burford made an upfront payment in full of $45,000 for a nine-month lease of a piece of equipment. Burford’s year end is 31 December 20X8. The company wishes to take advantage of any available recognition exemptions in IFRS 16 Leases.
Assuming Burford applies any permitted exemption, what amount would be charged to Burford’s statement of profit or loss for the year ended 31 December 20X8 in respect of this transaction?
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