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Ifrs 16 Example Lease Rent Free Period

This document provides an example calculation for IFRS 16 lease accounting with a rent-free period. It includes calculations for determining the initial lease liability and right-of-use asset, as well as quarterly schedules showing the reduction of the lease liability and depreciation of the right-of-use asset over the two year lease term. The example lease has a commencement date of January 1, 2001, an end date of December 31, 2002, and a 4% annual discount rate with two rent-free quarters to begin. Total payments over the lease term are $180,000 and total expense includes depreciation, discounting expense, and is equal to the total payments.

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639 views4 pages

Ifrs 16 Example Lease Rent Free Period

This document provides an example calculation for IFRS 16 lease accounting with a rent-free period. It includes calculations for determining the initial lease liability and right-of-use asset, as well as quarterly schedules showing the reduction of the lease liability and depreciation of the right-of-use asset over the two year lease term. The example lease has a commencement date of January 1, 2001, an end date of December 31, 2002, and a 4% annual discount rate with two rent-free quarters to begin. Total payments over the lease term are $180,000 and total expense includes depreciation, discounting expense, and is equal to the total payments.

Uploaded by

aldwin006
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as XLSX, PDF, TXT or read online on Scribd
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last updated: 5/23/2019

IFRS 16 example: rent-free period

Below are calculations accompanying the example available on IFRScommunity.com under direct link below:

https://ifrscommunity.com/knowledge-base/ifrs-16-recognition-and-measurement-of-leases/#link-ifrs-16-example-rent-fr

On IFRScommunity.com, years are written as 20X1, 20X2 etc., but this changes to 2001, 2002 etc. whenever a spreadsheet
Hence this example starts in 2001, but is NOT outdated at all :)

1/1/2001 commencement date discount rate


12/31/2002 end of lease term 4% per annum

future payments
quarter (Q) payment date of payment discount factor discounted amount
1 0 1/1/2001 1.0000 0 rent-free quarter
2 0 4/1/2001 0.9904 0 rent-free quarter
3 30,000 7/1/2001 0.9807 29,422
4 30,000 10/1/2001 0.9711 29,133
5 30,000 1/1/2002 0.9615 28,846
6 30,000 4/1/2002 0.9523 28,569
7 30,000 7/1/2002 0.9430 28,291
8 30,000 10/1/2002 0.9337 28,012

Liability Schedule before reassessment of lease term


172,272.37 Lease liability at initial recognition

quarter (Q) opening payment discount


1 172,272 - 1,674
2 173,946 - 1,709
3 175,656 (30,000) 1,447
4 147,103 (30,000) 1,163
5 118,266 (30,000) 858
6 89,124 (30,000) 581
7 59,705 (30,000) 295
8 30,000 (30,000) -
der direct link below:

eases/#link-ifrs-16-example-rent-free-period

2002 etc. whenever a spreadsheet formula needs a valid format date as an input.

t-free quarter
t-free quarter

Asset Schedule before reassessment of lease term


ase liability at initial recognition 172,272 Gross book value of the righ-of use asset at initial recognition

closing quarter (Q) NBV opening depreciation


173,946 1 172,272 (21,534)
175,656 2 150,738 (21,534)
147,103 3 129,204 (21,534)
118,266 4 107,670 (21,534)
89,124 5 86,136 (21,534)
59,705 6 64,602 (21,534)
30,000 7 43,068 (21,534)
- 8 21,534 (21,534)

180,000 Total payments


172,272 Depreciation expense
7,728 Discounting expense
180,000 Total expense
lease term
use asset at initial recognition

NBV closing
150,738
129,204
107,670
86,136
64,602
43,068
21,534
-

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