- 8 Marks
CR – May 2024 – L3 – SB – Q4a – Leases (IFRS 16)
Explanation of IFRS 16 recognition and measurement for lessee lease obligations
Question
Lease gives lessees the right to use assets in return for the lessee accepting an obligation to make a series of payments to the owner of the assets (the lessor). The previous accounting rules set out in IAS 17-Leases focused on identifying leases that were economically similar to purchasing the assets being leased. However, IFRS 16-Leases was issued subsequently and applies to accounting periods beginning on or after January 1, 2019. Earlier application is also permitted. Therefore, IFRS 16 replaced IAS 17, introducing material changes to the requirements for recognition of rights and obligations under leasing arrangements.
Required:
i. Explain how IFRS 16 requires lessees to recognize and measure rights and obligations under lease arrangements. (4 Marks)
ii. Discuss how a lessee should measure the rights and obligation under short-term lease arrangements.
(4 Marks)
Find Related Questions by Tags, levels, etc.
- Tags: Corporate Reporting, IFRS 16, Lease Obligations, Leases, Right-of-Use, Short-Term Leases
- Level: Level 3
- Topic: Leases (IFRS 16)
- Series: MAY 2024