Hi all, can anyone help me? How will be accounting in the below cases for lessee:
1) Leasing term - 12 years
IBR - 10%
Annually payments in arrears
First 4 years were paid in advance on commencement date. I know that prepayments recognised in ROUA. But what will be lease liability on commencement date and how will be calculated interest charge?
2) Leasing term - 12 years
IBR - 10%
Annually payments in arrears
Lease liability and ROUA initially recognised as in IFRS 16. In the beginning of 3rd year next 4 years were paid in advance. How will we treat with liability and ROUA in this case?
(sorry for my grammar mistakes...)
Best regards
IFSR 16 - Prepayments
Re: IFSR 16 - Prepayments
Hi,
You should add it in the ROU and depreciate it accordingly.
You should add it in the ROU and depreciate it accordingly.
Re: IFSR 16 - Prepayments
Hi, thank you for reply. Yes I know it. But what will be liability? 4 years were paid in advance, that is why, should we discount future lease payments for remained 8 years or how? If yes, how calculate interest charge? Because I tried it, but at the end of lease term liability has not become to zero.
And in 2nd case, should we adjust liability?
I would be greatful if you help me.
And in 2nd case, should we adjust liability?
I would be greatful if you help me.
Re: IFSR 16 - Prepayments
Why isn't the lease liability zero after the final lease payment is made?
Re: IFSR 16 - Prepayments
If you prepaid several years, then RoU will be higher than the lease liability as the prepaid amount will obviously be excluded from lease liability. If you can't arrive at nil lease liability at the end of lease term, then you need to double check your formulas in your spreadsheet. Use the excel files available in our knowledge base as your templates.
Re: IFSR 16 - Prepayments
I attached sample. İf it is not a problem for you, can you show me where I went wrong?
Re: IFSR 16 - Prepayments
Your PV of liabilities should be 1 822. 2668 is the value that you should have at the end of year 4.
A tip, always verify if the total expenses in the P&L equal the total payments.
A tip, always verify if the total expenses in the P&L equal the total payments.
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Re: IFSR 16 - Prepayments
Thank you so much. İ realized my mistake. And thanks for creating such a platform.
Best regards
Best regards
Re: IFSR 16 - Prepayments
If the lease started in October, how would the interest be calculated? I tried apportionment of 2/12 but then the figures got distorted and could not arrive to zero at the end of the lease term.
Re: IFSR 16 - Prepayments
@ramica - please start a new topic, describe the scenario, and explain what you're trying to achieve
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Re: IFSR 16 - Prepayments
Advance Payments are PVed with '0' days. So this value of 2667 is after deducting 2000 from total value of 4667 as this amount is paid day 1.
ROU definition per IFRS16 is PV of Lease Payments remaining after the lease start date +/- Prepayments and other adjustments.
Your liability if 2667 shall be amortized on a go forward basis like any other payment structure.
ROU definition per IFRS16 is PV of Lease Payments remaining after the lease start date +/- Prepayments and other adjustments.
Your liability if 2667 shall be amortized on a go forward basis like any other payment structure.