IFRS 16 Leases - Learn from Industry Data and Annual Reports
What you'll learn
- Understanding of leases
- Lease liability and Right of use of asset
- Fixed and in-substance fixed lease payments
- Guaranteed and Unguaranteed residual value
- Lease Exemptions
- Lessor accounting and disclosure
- Lease Term
- Discounting Rate
- Variable Lease Payments
- Lease Accounting and Disclosure
- Lease Classification
- Lease Modifactions
- Sale and Lease Back Accounting
- Knowledge of basic accounting and financial reporting
- Knowledge of basic excel is a plus but not a prerequisite
The objective of IFRS 16 is to report information that (a) faithfully represents lease transactions and (b) provides a basis for users of financial statements to assess the amount, timing, and uncertainty of cash flows arising from leases. To meet that objective, a lessee should recognize assets and liabilities arising from a lease.
IFRS 16 introduces a single lessee accounting model and requires a lessee to recognize assets and liabilities for all leases with a term of more than 12 months unless the underlying asset is of low value. A lessee is required to recognize a right-of-use asset representing its right to use the underlying leased asset and a lease liability representing its obligation to make lease payments.
Under IFRS 16, a lease is defined as a contract granting an entity the right to utilize a specific asset for a prescribed period of time in exchange for agreed-upon consideration. To determine whether a contract grants control of the asset to the lessee, the agreement must provide the following to the lessee:
The right to substantially all economic benefits from the use of the asset
The right to dictate how the asset is used by the entity
At times, an organization may have a contract that seems to meet the definition of a lease but does not fall within the scope of IFRS 16. Situations where this may occur include but are not limited to:
Leases of biological assets
Leases for the exploration of non-regenerative resources such as oil, gas, etc.
Service concession arrangements
Licenses of intellectual property
Concurrently, lessees reporting under IFRS 16 may choose to take advantage of practical expedients that exclude certain types of leases from capitalization. These include:
Short-term leases, defined as having a term of 12 months or less at commencement and no option to purchase the leased asset
Leases of low-value assets, defined as leases for which the underlying asset’s fair value (when the asset is new) is generally less than $5,000
Who this course is for:
- Finance Professionals, Valuers,
- BCOM, MCOM, MBA, CA, CFA and other Finance Professional Ccourses
CA Ankit Bajaj is having 15+ years of Finance Training and corporate experience. He has worked in a number of domains such as Consultancy, Healthcare, Manufacturing, etc. He has worked in the product as well as service-based companies.
He is currently working with multiple B Schools, Consultancy Firms, and Training Institutes. In his current role, he provides training to corporate learners, B-Schools, CA, CS, CFA, US CWA, ACCA aspirants
He delivers training on IFRS/IND AS, Direct Taxation, Financial Management, Fundamental Analysis, and doubt sessions for students. He also conducts technical interview mock sessions where he interacts with students and evaluates the level of clarity the student has in IFRS and IND AS and identifies an area of improvement.
He is an expert in fundamental analysis of various companies and stocks, working capital management, tax management, and finalization of books of accounts.