LEASING ACCOUNTING ACCORDING TO INTERNATIONAL REGULATIONS

IFRS 16 Leasing contracts:

This standard sets out the principles for the recognition, valuation, presentation and description of leasing contracts. The aim is to ensure that tenants and landlords provide relevant information in a way that accurately represents those transactions. Based on this information, users of the financial statements can assess the effect that leases have on an entity’s financial position, financial performance and cash flows.

When initiating a contract, an entity must assess whether that contract is, or includes, a lease. A contract is or contains a lease if that contract grants the right to control the use of an identified asset for a certain period of time in exchange for consideration.

An entity shall determine the duration of the lease agreement as the irrevocable period of a lease agreement together with:

• the periods covered by an option to extend the leasing contract if the lessee has reasonable certainty that he will exercise that option; and
• the periods covered by an option to terminate the lease if the lessee has reasonable certainty that he will not exercise that option.

On the date of commencement of the lease, a lessee must recognize an asset relating to the right of use and a liability arising from the leasing contract.

On the date of the start of the operation, a lessee must value the asset related to the right of use at cost.

At the start date, a lessee must value the debt arising from the lease agreement at the present value of the lease payments that are not paid on that date.

Lease payments must be discounted using the default interest rate in the lease agreement if that rate can be determined immediately.

If this rate cannot be determined immediately, the lessee must use the lessee’s marginal loan rate.

After the start date, a lessee must assess the debt arising from the leasing contract by:

• the increase in the carrying amount to reflect the interest associated with the debt arising from the leasing contract;
• reducing the carrying amount to reflect the leasing payments made; and
• revaluation of carrying amount to reflect any revaluation or changes to the lease.

The purpose of the disclosures is for the lessee to present in the notes information that, together with the information provided in the financial statements, provides users of the financial statements with a basis for assessing the effect that leasing contracts have on the financial position, financial performance and cash flows of the lessee. Items 52-60 stipulate provisions on how this objective can be achieved.