Hello everyone and thank you for the useful information provided in the Forum.
I have to deal with lease contracts, which start and end on "irregular" dates and my Measurement Date (IFRS 16 Initial Recognition Date) is 01/01/2020. Let me give you a short example:
Contract starts on 06/04/19 and ends on 05/04/23, lease payments: 200$ and frequency of payment is "Monthly". Also, lease payments are due at the beginning of each period.
Now, my question is how I am supposed to calculate Present Value Table (I suppose with a daily discount approach between payment date and measurement date?), Depreciation and Amortization Tables. All of the examples I have seen, have a "regular" lease term, e.g. 01/01/18-31/06/22. Could you please help me with an illustrative example of the tables?
Thank you in advance.
IFRS 16 Contracts with Irregular Dates
Re: IFRS 16 Contracts with Irregular Dates
Not the answer you want but personally I would calculate it as though 5 days earlier on the basis of materiality!
Re: IFRS 16 Contracts with Irregular Dates
the excel file below uses exact dates, you can use this one as your template:
https://ifrscommunity.com/wp-content/up ... ments.xlsx
https://ifrscommunity.com/wp-content/up ... ments.xlsx
-
- Posts: 3
- Joined: 13 Apr 2021, 21:16
Re: IFRS 16 Contracts with Irregular Dates
Thank you for your answer. However, I was wondering what depreciation must be recognised if we take into consideration that a lease period is “split” between two fiscal years. For example,
In the aforementioned example, the Contract starts on 06/04/19 and ends on 05/04/23, which means that the first payment in 2020 would be 06/01/20 for the following month. The question is whether depreciation from the previous lease payment (06/12/19-05/01/20) should be recognised in the first 5 days of January, as they “cover” the previous lease term. And what happens with the interest of this period.
Thank you again !
In the aforementioned example, the Contract starts on 06/04/19 and ends on 05/04/23, which means that the first payment in 2020 would be 06/01/20 for the following month. The question is whether depreciation from the previous lease payment (06/12/19-05/01/20) should be recognised in the first 5 days of January, as they “cover” the previous lease term. And what happens with the interest of this period.
Thank you again !
Re: IFRS 16 Contracts with Irregular Dates
what do you mean by depreciation? depreciation of right-of-use asset?
interest expense is not directly linked to specific payments, you could have only one payment after 5 years but still need to recognise interest expense each year
interest expense is not directly linked to specific payments, you could have only one payment after 5 years but still need to recognise interest expense each year
-
- Posts: 3
- Joined: 13 Apr 2021, 21:16
Re: IFRS 16 Contracts with Irregular Dates
Yes, I’m referring to the depreciation of ROU asset. ROU asset will be equal to the PV of unpaid lease payments which in our example start on 06/01/20. So, what about the portion of ROU asset in the first 5 days of January? Shouldn’t we recognise a depreciation amount for these days too?
Re: IFRS 16 Contracts with Irregular Dates
depreciation of RoU asset has nothing to do with how the payments are spread
https://ifrscommunity.com/knowledge-bas ... preciation
https://ifrscommunity.com/knowledge-bas ... preciation