Transcription of Short-term leases - Deloitte
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Short-term leases - Deloitte
I Short-term leases i Foreword IFRS 16 leases became effective for accounting periods beginning on or after 1 January 2019. The standard includes an important practical expedient for leases with a lease term of twelve months or less: Short-term leases . This expedient enables entities to simply expense lease payments over the lease term and avoid the more complex accounting of recognising a right-of-use asset and a corresponding liability on the balance sheet. On initial application, many entities have taken advantage of this practical expedient; however, it is important both from an accounting system s perspective and for those involved in negotiating and approving leases to understand the potential accounting consequences of subsequent
from the commencement date of the original lease to the end of the extended period. See example 3. This could be summarised as follows: Original lease term Extension accounted for as… Revised lease term Short-term A new lease on the effective date of the modification Determine from effective date of modification to end of extended period
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