Leases
(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 Ind AS 41, Agriculture , held by a lessee;
(c)
service concession arrangements within the scope of Appendix D, Service Concession Arrangements, of Ind AS 115, Revenue from Contracts with Customer ;
(d)
licences of intellectual property granted by a lessor within the scope of Ind AS 115, Revenue from Contracts with Customers ; and
(e)
rights held by a lessee under licensing agreements within the scope of Ind AS 38, Intangible Assets , for such items as motion picture films, video recordings, plays, manuscripts, patents and copyrights.
(a)
short-term leases ; and
(b)
leases for which the underlying asset is of low value (as described in paragraphs B3–B8).
(a)
there is a lease modification ; or
(b)
there is any change in the lease term (for example, the lessee exercises an option not previously included in its determination of the lease term).
(a)
periods covered by an option to extend the lease if the lessee is reasonably certain to exercise that option; and
(b)
periods covered by an option to terminate the lease if the lessee is reasonably certain not to exercise that option.
(a)
is within the control of the lessee; and
(b)
affects whether the lessee is reasonably certain to exercise an option not previously included in its determination of the lease term, or not to exercise an option previously included in its determination of the lease term (as described in paragraph B41).
(a)
the lessee exercises an option not previously included in the entity’s determination of the lease term;
(b)
the lessee does not exercise an option previously included in the entity’s determination of the lease term;
(c)
an event occurs that contractually obliges the lessee to exercise an option not previously included in the entity’s determination of the lease term; or
(d)
an event occurs that contractually prohibits the lessee from exercising an option previously included in the entity’s determination of the lease term.
(a)
the amount of the initial measurement of the lease liability, as described in paragraph 26;
(b)
any lease payments made at or before the commencement date, less any lease incentives received;
(c)
any initial direct costs incurred by the lessee; and
(d)
an estimate of costs to be incurred by the lessee in dismantling and removing the underlying asset, restoring the site on which it is located or restoring the underlying asset to the condition required by the terms and conditions of the lease, unless those costs are incurred to produce inventories. The lessee incurs the obligation for those costs either at the commencement date or as a consequence of having used the underlying asset during a particular period.
(a)
fixed payments (including in-substance fixed payments as described in paragraph B42 ), less any lease incentives receivable;
(b)
variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date (as described in paragraph 28);
(c)
amounts expected to be payable by the lessee under residual value guarantees ;
(d)
the exercise price of a purchase option if the lessee is reasonably certain to exercise that option (assessed considering the factors described in paragraphs B37–B40); and
(e)
payments of penalties for terminating the lease, if the lease term reflects the lessee exercising an option to terminate the lease.
(a)
less any accumulated depreciation and any accumulated impairment losses; and
(b)
adjusted for any remeasurement of the lease liability specified in paragraph 36(c).
(a)
increasing the carrying amount to reflect interest on the lease liability;
(b)
reducing the carrying amount to reflect the lease payments made; and
(c)
remeasuring the carrying amount to reflect any reassessment or lease modifications specified in paragraphs 39–46, or to reflect revised in-substance fixed lease payments (see paragraph B42).
(a)
interest on the lease liability; and
(b)
variable lease payments not included in the measurement of the lease liability in the period in which the event or condition that triggers those payments occurs.
(a)
there is a change in the lease term, as described in paragraphs 20 – 21 . A lessee shall determine the revised lease payments on the basis of the revised lease term; or
(b)
there is a change in the assessment of an option to purchase the underlying asset, assessed considering the events and circumstances described in paragraphs 20–21 in the context of a purchase option. A lessee shall determine the revised lease payments to reflect the change in amounts payable under the purchase option.
(a)
there is a change in the amounts expected to be payable under a residual value guarantee. A lessee shall determine the revised lease payments to reflect the change in amounts expected to be payable under the residual value guarantee.
(b)
there is a change in future lease payments resulting from a change in an index or a rate used to determine those payments, including for example a change to reflect changes in market rental rates following a market rent review. The lessee shall remeasure the lease liability to reflect those revised lease payments only when there is a change in the cash flows (ie when the adjustment to the lease payments takes effect). A lessee shall determine the revised lease payments for the remainder of the lease term based on the revised contractual payments.
(a)
the modification increases the scope of the lease by adding the right to use one or more underlying assets; and
(b)
the consideration for the lease increases by an amount commensurate with the stand-alone price for the increase in scope and any appropriate adjustments to that stand-alone price to reflect the circumstances of the particular contract.
(a)
allocate the consideration in the modified contract applying paragraphs 13 – 16 ;
(b)
determine the lease term of the modified lease applying paragraphs 18 – 19 ; and
(c)
remeasure the lease liability by discounting the revised lease payments using a revised discount rate. The revised discount rate is determined as the interest rate implicit in the lease for the remainder of the lease term, if that rate can be readily determined, or the lessee’s incremental borrowing rate at the effective date of the modification , if the interest rate implicit in the lease cannot be readily determined.
(a)
decreasing the carrying amount of the right-of-use asset to reflect the partial or full termination of the lease for lease modifications that decrease the scope of the lease. The lessee shall recognise in profit or loss any gain or loss relating to the partial or full termination of the lease.
(b)
making a corresponding adjustment to the right-of-use asset for all other lease modifications.
(a)
the change in lease payments results in revised consideration for the lease that is substantially the same as, or less than, the consideration for the lease immediately preceding the change;
(b)
2 any reduction in lease payments affects only payments originally due on or before the 30t h June, 2022 (for example, a rent concession would meet this condition if it results in reduced lease payments on or before the 30 t h June, 2022 and increased lease payments that extend beyond the 30 t h
(c)
there is no substantive change to other terms and conditions of the lease.
(a)
right-of-use assets separately from other assets. If a lessee does not present right-of-use assets separately in the balance sheet, the lessee shall:
(i)
include right-of-use assets within the same line item as that within which the corresponding underlying assets would be presented if they were owned; and
(ii)
disclose which line items in the balance sheet include those right-of-use assets.
(b)
lease liabilities separately from other liabilities. If a lessee does not present lease liabilities separately in the balance sheet, the lessee shall disclose which line items in the balance sheet include those liabilities.
(a)
cash payments for the principal portion of the lease liability within financing activities;
(b)
cash payments for the interest portion of the lease liability within financing activities applying the requirements in Ind AS 7, Statement of Cash Flows , for interest paid; and
(c)
short-term lease payments, payments for leases of low-value assets and variable lease payments not included in the measurement of the lease liability within operating activities.
(a)
depreciation charge for right-of-use assets by class of underlying asset;
(b)
interest expense on lease liabilities;
(c)
the expense relating to short-term leases accounted for applying paragraph 6. This expense need not include the expense relating to leases with a lease term of one month or less;
(d)
the expense relating to leases of low-value assets accounted for applying paragraph 6 . This expense shall not include the expense relating to short-term leases of low-value assets included in paragraph 53(c);
(e)
the expense relating to variable lease payments not included in the measurement of lease liabilities;
(f)
income from subleasing right-of-use assets;
(g)
total cash outflow for leases;
(h)
additions to right-of-use assets;
(i)
gains or losses arising from sale and leaseback transactions; and
(j)
the carrying amount of right-of-use assets at the end of the reporting period by class of underlying asset.
(a)
the nature of the lessee’s leasing activities;
(b)
future cash outflows to which the lessee is potentially exposed that are not reflected in the measurement of lease liabilities. This includes exposure arising from:
(i)
variable lease payments (as described in paragraph B49);
(ii)
extension options and termination options (as described in paragraph B50);
(iii)
residual value guarantees (as described in paragraph B51); and
(iv)
leases not yet commenced to which the lessee is committed.
(c)
restrictions or covenants imposed by leases; and
(d)
sale and leaseback transactions (as described in paragraph B52 ).
(a)
that it has applied the practical expedient to all rent concessions that meet the conditions in paragraph 46B or, if not applied to all such rent concessions, information about the nature of the contracts to which it has applied the practical expedient (see paragraph 2 ); and
(b)
the amount recognised in profit or loss for the reporting period to reflect changes in lease payments that arise from rent concessions to which the lessee has applied the practical expedient in paragraph 46A.
(a)
the lease transfers ownership of the underlying asset to the lessee by the end of the lease term;
(b)
the lessee has the option to purchase the underlying asset at a price that is expected to be sufficiently lower than the fair value at the date the option becomes exercisable for it to be reasonably certain, at the inception date , that the option will be exercised;
(c)
the lease term is for the major part of the economic life of the underlying asset even if title is not transferred;
(d)
at the inception date, the present value of the lease payments amounts to at least substantially all of the fair value of the underlying asset; and
(e)
the underlying asset is of such a specialised nature that only the lessee can use it without major modifications.
(a)
if the lessee can cancel the lease, the lessor’s losses associated with the cancellation are borne by the lessee;
(b)
gains or losses from the fluctuation in the fair value of the residual accrue to the lessee (for example, in the form of a rent rebate equaling most of the sales proceeds at the end of the lease); and
(c)
the lessee has the ability to continue the lease for a secondary period at a rent that is substantially lower than market rent.
(a)
fixed payments (including in-substance fixed payments as described in paragraph B42 ), less any lease incentives payable;
(b)
variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date;
(c)
any residual value guarantees provided to the lessor by the lessee, a party related to the lessee or a third party unrelated to the lessor that is financially capable of discharging the obligations under the guarantee;
(d)
the exercise price of a purchase option if the lessee is reasonably certain to exercise that option (assessed considering the factors described in paragraph B37) ; and
(e)
payments of penalties for terminating the lease, if the lease term reflects the lessee exercising an option to terminate the lease.
(a)
revenue being the fair value of the underlying asset, or, if lower, the present value of the lease payments accruing to the lessor, discounted using a market rate of interest;
(b)
the cost of sale being the cost, or carrying amount if different, of the underlying asset less the present value of the unguaranteed residual value ; and
(c)
selling profit or loss (being the difference between revenue and the cost of sale) in accordance with its policy for outright sales to which Ind AS 115 applies. A manufacturer or dealer lessor shall recognise selling profit or loss on a finance lease at the commencement date, regardless of whether the lessor transfers the underlying asset as described in Ind AS 115 .
(a)
the modification increases the scope of the lease by adding the right to use one or more underlying assets; and
(b)
the consideration for the lease increases by an amount commensurate with the stand-alone price for the increase in scope and any appropriate adjustments to that stand-alone price to reflect the circumstances of the particular contract.
(a)
if the lease would have been classified as an operating lease had the modification been in effect at the inception date, the lessor shall:
(i)
account for the lease modification as a new lease from the effective date of the modification; and
(ii)
measure the carrying amount of the underlying asset as the net investment in the lease immediately before the effective date of the lease modification.
(b)
otherwise, the lessor shall apply the requirements of Ind AS 109.
(a)
for finance leases:
(i)
selling profit or loss;
(ii)
finance income on the net investment in the lease; and
(iii)
income relating to variable lease payments not included in the measurement of the net investment in the lease.
(b)
for operating leases, lease income, separately disclosing income relating to variable lease payments that do not depend on an index or a rate.
(a)
the nature of the lessor’s leasing activities; and
(b)
how the lessor manages the risk associated with any rights it retains in underlying assets. In particular, a lessor shall disclose its risk management strategy for the rights it retains in underlying assets, including any means by which the lessor reduces that risk. Such means may include, for example, buy-back agreements, residual value guarantees or variable lease payments for use in excess of specified limits.
(a)
the seller-lessee shall measure the right-of-use asset arising from the leaseback at the proportion of the previous carrying amount of the asset that relates to the right of use retained by the seller-lessee. Accordingly, the seller-lessee shall recognise only the amount of any gain or loss that relates to the rights transferred to the buyer-lessor.
(b)
the buyer-lessor shall account for the purchase of the asset applying applicable Standards, and for the lease applying the lessor accounting requirements in this Standard.
(a)
any below-market terms shall be accounted for as a prepayment of lease payments; and
(b)
any above-market terms shall be accounted for as additional financing provided by the buyer-lessor to the seller-lessee.
(a)
the difference between the fair value of the consideration for the sale and the fair value of the asset; and
(b)
the difference between the present value of the contractual payments for the lease and the present value of payments for the lease at market rates.
(a)
the seller-lessee shall continue to recognise the transferred asset and shall recognise a financial liability equal to the transfer proceeds. It shall account for the financial liability applying Ind AS 109.
(b)
the buyer-lessor shall not recognise the transferred asset and shall recognise a financial asset equal to the transfer proceeds. It shall account for the financial asset applying Ind AS 109.
(a)
the modification is necessary as a direct consequence of interest rate benchmark reform; and
(b)
the new basis for determining the lease payments is economically equivalent to the previous basis (ie the basis immediately preceding the modification).
(a)
the lease payments receivable by a lessor under a finance lease ; and
(b)
any unguaranteed residual value accruing to the lessor.
(a)
the lease payments and (b) the unguaranteed residual value to equal the sum of (i) the fair value of the underlying asset and (ii) any initial direct costs of the lessor.
(a)
fixed payments (including in-substance fixed payments), less any lease incentives;
(b)
variable lease payments that depend on an index or a rate;
(c)
the exercise price of a purchase option if the lessee is reasonably certain to exercise that option; and
(d)
payments of penalties for terminating the lease , if the lease term reflects the lessee exercising an option to terminate the lease
(a)
periods covered by an option to extend the lease if the lessee is reasonably certain to exercise that option; and
(b)
periods covered by an option to terminate the lease if the lessee is reasonably certain not to exercise that option.
(a)
the gross investment in the lease ; and
(b)
the net investment in the lease .
(a)
the contracts are negotiated as a package with an overall commercial objective that cannot be understood without considering the contracts together;
(b)
the amount of consideration to be paid in one contract depends on the price or performance of the other contract; or
(c)
the rights to use underlying assets conveyed in the contracts (or some rights to use underlying assets conveyed in each of the contracts) form a single lease component as described in paragraph B32 .
(a)
the lessee can benefit from use of the underlying asset on its own or together with other resources that are readily available to the lessee; and
(b)
the underlying asset is not highly dependent on, or highly interrelated with, other assets.
(a)
the right to obtain substantially all of the economic benefits from use of the identified asset (as described in paragraphs B21 – B23 ); and
(b)
the right to direct the use of the identified asset (as described in paragraphs B24 – B30 ).
(a)
the supplier has the practical ability to substitute alternative assets throughout the period of use (for example, the customer cannot prevent the supplier from substituting the asset and alternative assets are readily available to the supplier or could be sourced by the supplier within a reasonable period of time); and
(b)
the supplier would benefit economically from the exercise of its right to substitute the asset (ie the economic benefits associated with substituting the asset are expected to exceed the costs associated with substituting the asset).
(a)
an agreement by a future customer to pay an above market rate for use of the asset;
(b)
the introduction of new technology that is not substantially developed at inception of the contract;
(c)
a substantial difference between the customer’s use of the asset, or the performance of the asset, and the use or performance considered likely at inception of the contract; and
(d)
a substantial difference between the market price of the asset during the period of use, and the market price considered likely at inception of the contract.
(a)
if a contract limits the use of a motor vehicle to only one particular territory during the period of use, an entity shall consider only the economic benefits from use of the motor vehicle within that territory, and not beyond.
(b)
if a contract specifies that a customer can drive a motor vehicle only up to a particular number of miles during the period of use, an entity shall consider only the economic benefits from use of the motor vehicle for the permitted mileage, and not beyond.
(a)
the customer has the right to direct how and for what purpose the asset is used throughout the period of use (as described in paragraphs B25–B30); or
(b)
the relevant decisions about how and for what purpose the asset is used are predetermined and:
(i)
the customer has the right to operate the asset (or to direct others to operate the asset in a manner that it determines) throughout the period of use, without the supplier having the right to change those operating instructions; or
(ii)
the customer designed the asset (or specific aspects of the asset) in a way that predetermines how and for what purpose the asset will be used throughout the period of use.
(a)
rights to change the type of output that is produced by the asset (for example, to decide whether to use a shipping container to transport goods or for storage, or to decide upon the mix of products sold from retail space);
(b)
rights to change when the output is produced (for example, to decide when an item of machinery or a power plant will be used);
(c)
rights to change where the output is produced (for example, to decide upon the destination of a truck or a ship, or to decide where an item of equipment is used); and
(d)
rights to change whether the output is produced, and the quantity of that output (for example, to decide whether to produce energy from a power plant and how much energy to produce from that power plant).
(a)
the lessee can benefit from use of the underlying asset either on its own or together with other resources that are readily available to the lessee. Readily available resources are goods or services that are sold or leased separately (by the lessor or other suppliers) or resources that the lessee has already obtained (from the lessor or from other transactions or events); and
(b)
the underlying asset is neither highly dependent on, nor highly interrelated with, the other underlying assets in the contract. For example, the fact that a lessee could decide not to lease the underlying asset without significantly affecting its rights to use other underlying assets in the contract might indicate that the underlying asset is not highly dependent on, or highly interrelated with, those other underlying assets.
(a)
contractual terms and conditions for the optional periods compared with market rates, such as:
(i)
the amount of payments for the lease in any optional period;
(ii)
the amount of any variable payments for the lease or other contingent payments, such as payments resulting from termination penalties and residual value guarantees ; and
(iii)
the terms and conditions of any options that are exercisable after initial optional periods (for example, a purchase option that is exercisable at the end of an extension period at a rate that is currently below market rates).
(b)
significant leasehold improvements undertaken (or expected to be undertaken) over the term of the contract that are expected to have significant economic benefit for the lessee when the option to extend or terminate the lease, or to purchase the underlying asset, becomes exercisable;
(c)
costs relating to the termination of the lease, such as negotiation costs, relocation costs, costs of identifying another underlying asset suitable for the lessee’s needs, costs of integrating a new asset into the lessee’s operations, or termination penalties and similar costs, including costs associated with returning the underlying asset in a contractually specified condition or to a contractually specified location;
(d)
the importance of that underlying asset to the lessee’s operations, considering, for example, whether the underlying asset is a specialised asset, the location of the underlying asset and the availability of suitable alternatives; and
(e)
conditionality associated with exercising the option (ie when the option can be exercised only if one or more conditions are met), and the likelihood that those conditions will exist.
(a)
significant leasehold improvements not anticipated at the commencement date that are expected to have significant economic benefit for the lessee when the option to extend or terminate the lease, or to purchase the underlying asset, becomes exercisable;
(b)
a significant modification to, or customisation of, the underlying asset that was not anticipated at the commencement date;
(c)
the inception of a sublease of the underlying asset for a period beyond the end of the previously determined lease term; and
(d)
a business decision of the lessee that is directly relevant to exercising, or not exercising, an option (for example, a decision to extend the lease of a complementary asset, to dispose of an alternative asset or to dispose of a business unit within which the right-of-use asset is employed).
(a)
payments are structured as variable lease payments, but there is no genuine variability in those payments. Those payments contain variable clauses that do not have real economic substance. Examples of those types of payments include:
(i)
payments that must be made only if an asset is proven to be capable of operating during the lease, or only if an event occurs that has no genuine possibility of not occurring; or
(ii)
payments that are initially structured as variable lease for which the variability will be resolved at some point after the commencement date so that the payments become fixed for the remainder of the lease term. Those payments become in-substance fixed payments when the variability is resolved.
(b)
there is more than one set of payments that a lessee could make, but only one of those sets of payments is realistic. In this case, an entity shall consider the realistic set of payments to be lease payments.
(c)
there is more than one realistic set of payments that a lessee could make, but it must make at least one of those sets of payments. In this case, an entity shall consider the set of payments that aggregates to the lowest amount (on a discounted basis) to be lease payments.
(a)
whether that information is relevant to users of financial statements. A lessee shall provide additional information specified in paragraph 59 only if that information is expected to be relevant to users of financial statements. In this context, this is likely to be the case if it helps those users to understand:
(i)
the flexibility provided by leases. Leases may provide flexibility if, for example, a lessee can reduce its exposure by exercising termination options or renewing leases with favourable terms and conditions.
(ii)
restrictions imposed by leases. Leases may impose restrictions, for example, by requiring the lessee to maintain particular financial ratios.
(ii)
sensitivity of reported information to key variables. Reported information may be sensitive to, for example, future variable lease payments.
(iv)
exposure to other risks arising from leases.
(v)
deviations from industry practice. Such deviations may include, for example, unusual or unique lease terms and conditions that affect a lessee’s lease portfolio.
(b)
whether that information is apparent from information either presented in the primary financial statements or disclosed in the notes. A lessee need not duplicate information that is already presented elsewhere in the financial statements.
(a)
the lessee’s reasons for using variable lease payments and the prevalence of those payments;
(b)
the relative magnitude of variable lease payments to fixed payments;
(c)
key variables upon which variable lease payments depend and how payments are expected to vary in response to changes in those key variables; and
(d)
other operational and financial effects of variable lease payments.
(a)
the lessee’s reasons for using extension options or termination options and the prevalence of those options;
(b)
the relative magnitude of optional lease payments to lease payments;
(c)
the prevalence of the exercise of options that were not included in the measurement of lease liabilities; and
(d)
other operational and financial effects of those options.
(a)
the lessee’s reasons for providing residual value guarantees and the prevalence of those guarantees;
(b)
the magnitude of a lessee’s exposure to residual value risk;
(c)
the nature of underlying assets for which those guarantees are provided; and
(d)
other operational and financial effects of those guarantees.
(a)
the lessee’s reasons for sale and leaseback transactions and the prevalence of those transactions;
(b)
key terms and conditions of individual sale and leaseback transactions;
(c)
payments not included in the measurement of lease liabilities; and
(d)
the cash flow effect of sale and leaseback transactions in the reporting period.
(a)
if the head lease is a short-term lease that the entity, as a lessee, has accounted for applying paragraph 6 , the sublease shall be classified as an operating lease.
(b)
otherwise, the sublease shall be classified by reference to the right-of-use asset arising from the head lease, rather than by reference to the underlying asset (for example, the item of property, plant or equipment that is the subject of the lease).
(a)
to apply this Standard to contracts that were previously identified as leases applying Ind AS 17, Leases . The entity shall apply the transition requirements in paragraphs C5–C18 to those leases.
(b)
not to apply this Standard to contracts that were not previously identified as containing a lease applying Ind AS 17.
(a)
retrospectively to each prior reporting period presented applying Ind AS 8, Accounting Policies, Changes in Accounting Estimates and Errors ; or
(b)
retrospectively with the cumulative effect of initially applying the Standard recognised at the date of initial application in accordance with paragraphs C7–C13.
(a)
recognise a lease liability at the date of initial application for leases previously classified as an operating lease applying Ind AS 17. The lessee shall measure that lease liability at the present value of the remaining lease payments, discounted using the lessee’s incremental borrowing rate at the date of initial application.
(b)
recognise a right-of-use asset at the date of initial application for leases previously classified as an operating lease applying Ind AS 17. The lessee shall choose, on a lease-by-lease basis, to measure that right-of-use asset at either:
(i)
its carrying amount as if the Standard had been applied since the commencement date, but discounted using the lessee’s incremental borrowing rate at the date of initial application; or
(ii)
an amount equal to the lease liability, adjusted by the amount of any prepaid or accrued lease payments relating to that lease recognised in the balance sheet immediately before the date of initial application.
(c)
apply Ind AS 36, Impairment of Assets , to right-of-use assets at the date of initial application, unless the lessee applies the practical expedient in paragraph C10(b).
(a)
is not required to make any adjustments on transition for leases for which the underlying asset is of low value (as described in paragraphs B3–B8) that will be accounted for applying paragraph 6. The lessee shall account for those leases applying this Standard from the date of initial application.
(b)
[Refer Appendix 1].
(c)
[Refer Appendix 1].
(a)
a lessee may apply a single discount rate to a portfolio of leases with reasonably similar characteristics (such as leases with a similar remaining lease term for a similar class of underlying asset in a similar economic environment).
(b)
a lessee may rely on its assessment of whether leases are onerous applying Ind AS 37, Provisions, Contingent Liabilities and Contingent Assets , immediately before the date of initial application as an alternative to performing an impairment review. If a lessee chooses this practical expedient, the lessee shall adjust the right-of-use asset at the date of initial application by the amount of any provision for onerous leases recognised in the balance sheet immediately before the date of initial application.
(c)
a lessee may elect not to apply the requirements in paragraph C8 to leases for which the lease term ends within 12 months of the date of initial application. In this case, a lessee shall:
(i)
account for those leases in the same way as short-term leases as described in paragraph 6; and
(ii)
include the cost associated with those leases within the disclosure of short-term lease expense in the annual reporting period that includes the date of initial application.
(d)
a lessee may exclude initial direct costs from the measurement of the right-of-use asset at the date of initial application.
(e)
a lessee may use hindsight, such as in determining the lease term if the contract contains options to extend or terminate the lease.
(a)
the weighted average lessee’s incremental borrowing rate applied to lease liabilities recognised in the balance sheet at the date of initial application; and
(b)
an explanation of any difference between:
(i)
operating lease commitments disclosed applying Ind AS 17 at the end of the annual reporting period immediately preceding the date of initial application, discounted using the incremental borrowing rate at the date of initial application as described in paragraph C8(a); and
(ii)
lease liabilities recognised in the balance sheet at the date of initial application.
(a)
reassess subleases that were classified as operating leases applying Ind AS 17 and are ongoing at the date of initial application, to determine whether each sublease should be classified as an operating lease or a finance lease applying this Standard. The intermediate lessor shall perform this assessment at the date of initial application on the basis of the remaining contractual terms and conditions of the head lease and sublease at that date.
(b)
for subleases that were classified as operating leases applying Ind AS 17 but finance leases applying this Standard, account for the sublease as a new finance lease entered into at the date of initial application.
(a)
account for the leaseback in the same way as it accounts for any other finance lease that exists at the date of initial application; and
(b)
continue to amortise any gain on sale over the lease term.
(a)
account for the leaseback in the same way as it accounts for any other operating lease that exists at the date of initial application; and
(b)
adjust the leaseback right-of-use asset for any deferred gains or losses that relate to off-market terms recognised in the balance sheet immediately before the date of initial application.
(a)
₹ 559,645 ( ₹ 800,000 × ₹ 1,259,200 ÷ ₹ 1,800,000) relates to the right to use the building retained by Seller-lessee; and
(b)
₹ 240,355 ( ₹ 800,000 × ( ₹ 1,800,000 – ₹ 1,259,200) ÷ ₹ 1,800,000) relates to the rights transferred to Buyer-lessor.
(a)
Applying paragraph 100(a) of Ind AS 116, Seller-lessee determines the proportion of the building transferred to Buyer-lessor that relates to the right of use retained by comparing, at the commencement date, the right of use it retains via the leaseback to the rights comprising the entire building. Paragraph 100(a) does not prescribe a particular method for determining that proportion.
(b)
Applying paragraph 102A and paragraph 36(b) of Ind AS 116, Seller-lessee reduces the carrying amount of the lease liability with ‘lease payments’ that reflect the expected lease payments estimated at the commencement date and, when discounted, result in the carrying amount of the lease liability at that date of ₹ 450,000.
(c)
Applying paragraph 102A and paragraph 36(a) of Ind AS 116, Seller-lessee increases the carrying amount of the lease liability to reflect interest on the lease liability using its incremental borrowing rate.
(d)
Applying paragraph 102A and paragraph 36(b) of Ind AS 116, Seller-lessee reduces the carrying amount of the lease liability with ‘lease payments’ that reflect equal periodic payments over the lease term that, when discounted, result in the carrying amount of the lease liability at the commencement date of ₹ 450,000.
Notes, amendments & references (18)
# This Ind AS was notified vide G.S.R. 273(E) dated 30t h March, 2019 and was amended vide Notification No. G.S.R. 463(E) dated 24 t h July, 2020, G.S.R. 419(E) dated 18 t h June, 2021 and G.S.R. 554(E) dated 9th September, 2024.
1 Paragraphs 46A-46B inserted vide Notification No. G.S.R. 463(E) dated 24t h July, 2020.
2 Substituted vide Notification No. G.S.R. 419(E) dated 18 th June, 2021.
3 Inserted vide Notification No. G.S.R. 463(E) dated 24t h July, 2020.
4 Inserted vide Notification No. G.S.R. 554(E) dated 9 th September, 2024.
5 Heading and paragraphs 104-106 inserted vide Notification No. G.S.R. 419(E) dated 18 th June, 2021.
6 Inserted vide Notification No. G.S.R. 463(E) dated 24t h July, 2020.
7 Inserted vide Notification No. G.S.R. 419(E) dated 18 th June, 2021.
8 Inserted vide Notification No. G.S.R. 419(E) dated 18 th June, 2021.
9 Inserted vide Notification No. G.S.R. 554(E) dated 9 th September, 2024.
10 Substituted vide Notification No. G.S.R. 554(E) dated 9 th September, 2024.
11 Heading and paragraphs C20A-C20B inserted vide Notification No. G.S.R. 463(E) dated 24th July, 2020.
12 Inserted vide Notification No. G.S.R. 419(E) dated 18 th June, 2021.
13 Inserted vide Notification No. G.S.R. 419(E) dated 18 th June, 2021.
14 Inserted vide Notification No. G.S.R. 419(E) dated 18 th June, 2021.
15 Heading and paragraphs C20C-C20D inserted vide Notification No. G.S.R. 419(E) dated 18 th June, 2021.
16 Heading and paragraph C20E inserted vide Notification No. G.S.R. 554(E) dated 9 th September, 2024.
17 Inserted vide Notification No. G.S.R. 554(E) dated 9 th September, 2024.