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 amendments or renewals of these leases .
In reverse chronological order: ... IFRS 16 Leases defines a short-term lease as one that has a lease term of 12 months or less without any purchase options. ... 4 All entities in this publication have a December year-end. 6 Example 2 Original lease is a short-term lease ...
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