Seasonal short term lease under IFRS 16

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Yousaf
Posts: 53
Joined: 17 Aug 2022, 08:58

Seasonal short term lease under IFRS 16

Post by Yousaf »

Hi !

Question is that:

company A entered into an agreement with company B for lease of equipment for period of six month e.g. 01 April 2022 to 30 September 2022. After expiry of lease period, equipment are return to company B.

Each year same contracts continue with same ROU for period of 6 month.

Is it is short term lease?

If not, what will lease term?
JRSB
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Location: UK

Re: Seasonal short term lease under IFRS 16

Post by JRSB »

Yes I'd say completely separate short term leases, particularly since the asset is returned for 6 months.
Yousaf
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Joined: 17 Aug 2022, 08:58

Re: Seasonal short term lease under IFRS 16

Post by Yousaf »

Ok. Thanks
Leo
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Joined: 05 Apr 2020, 22:31

Re: Seasonal short term lease under IFRS 16

Post by Leo »

I'm not so sure because there is no requirement in the standard for the non-cancellable period to be continuous... Depending on the intention of the company to renew the contract, it would still be a lease under IFRS 16, from my point of view.
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Marek Muc
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Re: Seasonal short term lease under IFRS 16

Post by Marek Muc »

it is actually covered in IFRS 16:
https://ifrscommunity.com/knowledge-bas ... -contracts

but in the example discussed here, the contracts are not entered into at or near the same time
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