IFRS 16 – 2021 Issued IFRS Standards (Part A)

1 ifrs 16 LeasesIn April 2001 the International Accounting Standards Board (Board) adopted IAS 17 Leases,which had originally been Issued by the International Accounting Standards Committee(IASC) in December 1997. IAS 17 Leases replaced IAS 17 Accounting for Leases that was issuedin September April 2001 the Board adopted SIC-15 Operating Leases Incentives, which had originallybeen Issued by the Standing Interpretations Committee of the IASC in December December 2001 the Board Issued SIC-27 Evaluating the Substance of Transactions Involvingthe Legal Form of a Lease.

2 SIC-27 had originally been developed by the StandingInterpretations Committee of the IASC to provide guidance on determining, amongstother things, whether an arrangement that involves the legal form of a lease meets thedefinition of a lease under IAS December 2003 the Board Issued a revised IAS 17 as part of its initial agenda oftechnical December 2004 the Board Issued IFRIC 4 Determining whether an Arrangement contains aLease. The Interpretation was developed by the Interpretations Committee to provideguidance on determining whether transactions that do not take the legal form of a leasebut convey the right to use an asset in return for a payment or series of payments are, orcontain, leases that should be accounted for in accordance with IAS January 2016 the Board Issued ifrs 16 Leases.

3 ifrs 16 replaces IAS 17, IFRIC 4, SIC-15and SIC-27. ifrs 16 sets out the principles for the recognition, measurement,presentation and disclosure of May 2020 the Board Issued Covid-19-Related Rent Concessions, which amended ifrs amendment permits lessees, as a practical expedient, not to assess whether rentconcessions that occur as a direct consequence of the covid-19 pandemic and meetspecified conditions are lease modifications. Instead, the lessee accounts for those rentconcessions as if they were not lease August 2020 the Board Issued Interest Rate Benchmark Reform Phase 2 which amendedrequirements in ifrs 9, IAS 39, ifrs 7, ifrs 4 and ifrs 16 relating to: changes in the basis for determining contractual cash flows of financial assets,financial liabilities and lease liabilities; hedge accounting.

4 And Phase 2 amendments apply only to changes required by the interest rate benchmarkreform to financial instruments and hedging Standards have made minor consequential amendments to ifrs 16,including Amendments to References to the Conceptual Framework in ifrs Standards (issuedMarch 2018). ifrs 16 ifrs FoundationA819 CONTENTS from paragraphINTERNATIONAL FINANCIAL REPORTINGSTANDARD 16 LEASESOBJECTIVE1 SCOPE3 RECOGNITION EXEMPTIONS5 IDENTIFYING A LEASE9 Separating components of a contract12 LEASE TERM18 LESSEE22 Recognition22 Measurement22 Presentation47 Disclosure51 LESSOR61 Classification of leases61 Finance leases67 Operating leases81 Disclosure89 SALE AND LEASEBACK TRANSACTIONS98 Assessing whether the transfer of the asset is a sale99 TEMPORARY EXCEPTION ARISING FROM INTEREST RATE BENCHMARKREFORM104 APPENDICESA Defined termsB Application

5 GuidanceC Effective date and transitionD Amendments to other StandardsAPPROVAL BY THE BOARD OF ifrs 16 LEASES Issued IN JANUARY 2016 APPROVAL BY THE BOARD OF:Covid-19-Related Rent Concessions Issued in May 2020 Interest Rate Benchmark Reform Phase 2 Issued in August 2020 FOR THE ACCOMPANYING GUIDANCE LISTED BELOW, SEE PART B OF THIS EDITIONILLUSTRATIVE EXAMPLESAPPENDIX TO THE ILLUSTRATIVE EXAMPLESA mendments to guidance on other 16A820 ifrs THE BASIS FOR CONCLUSIONS, SEE PART C OF THIS EDITIONBASIS FOR CONCLUSIONSDISSENTING OPINIONAPPENDIX TO THE BASIS FOR CONCLUSIONSA mendments to the Basis for Conclusions on other StandardsIFRS 16 ifrs FoundationA821 International Financial Reporting Standard 16 Leases ( ifrs 16) is set out in paragraphs1 106 and Appendices A D.

6 All the paragraphs have equal authority. Paragraphsin bold type state the main principles. Terms defined in Appendix A are in italics thefirst time that they appear in the Standard. Definitions of other terms are given in theGlossary for International Financial Reporting Standards . The Standard should be readin the context of its objective and the Basis for Conclusions, the Preface to IFRSS tandards and the Conceptual Framework for Financial Reporting. IAS 8 Accounting Policies,Changes in Accounting Estimates and Errors provides a basis for selecting and applyingaccounting policies in the absence of explicit 16A822 ifrs FoundationInternational Financial Reporting Standard 16 LeasesObjectiveThis Standard sets out the principles for the recognition, measurement,presentation and disclosure of leases.

7 The objective is to ensure that lesseesand lessors provide relevant information in a manner that faithfullyrepresents those transactions. This information gives a basis for users offinancial statements to assess the effect that leases have on the financialposition, financial performance and cash flows of an entity shall consider the terms and conditions of contracts and all relevantfacts and circumstances when applying this Standard. An entity shall applythis Standard consistently to contracts with similar characteristics and insimilar entity shall apply this Standard to all leases, including leases of right-of-useassets in a sublease, except for:(a)leases to explore for or use minerals, oil, natural gas and similar non-regenerative resources;(b)leases of biological assets within the scope of IAS 41 Agriculture held bya lessee;(c)service concession arrangements within the scope of IFRIC 12 ServiceConcession Arrangements.

8 (d)licences of intellectual property granted by a lessor within the scope ofIFRS 15 Revenue from Contracts with Customers; and(e)rights held by a lessee under licensing agreements within the scope ofIAS 38 Intangible Assets for such items as motion picture films, videorecordings, plays, manuscripts, patents and lessee may, but is not required to, apply this Standard to leases of intangibleassets other than those described in paragraph 3(e).Recognition exemptions (paragraphs B3 B8)A lessee may elect not to apply the requirements in paragraphs 22 49 to:(a)short-term leases; and(b)leases for which the underlying asset is of low value (as described inparagraphs B3 B8).

9 12345 ifrs 16 ifrs FoundationA823If a lessee elects not to apply the requirements in paragraphs 22 49 to eithershort-term leases or leases for which the underlying asset is of low value, thelessee shall recognise the lease payments associated with those leases as anexpense on either a straight-line basis over the lease term or another systematicbasis. The lessee shall apply another systematic basis if that basis is morerepresentative of the pattern of the lessee s a lessee accounts for short-term leases applying paragraph 6, the lessee shallconsider the lease to be a new lease for the purposes of this Standard if:(a)there is a lease modification; or(b)there is any change in the lease term (for example, the lessee exercisesan option not previously included in its determination of the leaseterm).

10 The election for short-term leases shall be made by class of underlying asset towhich the right of use relates. A class of underlying asset is a grouping ofunderlying assets of a similar nature and use in an entity s operations. Theelection for leases for which the underlying asset is of low value can be madeon a lease-by-lease a lease (paragraphs B9 B33)At inception of a contract, an entity shall assess whether the contract is, orcontains, a lease. A contract is, or contains, a lease if the contract conveysthe right to control the use of an identified asset for a period of time inexchange for consideration.