last updated: 4/2/2019

IFRS 16 example: initial measurement of the right-of-use asset and lease liability (quarterly payments)

Below is an example that is a variation of the example available under the link below. In this variation, payments are ma

https://ifrscommunity.com/knowledge-base/ifrs-16-recognition-and-measurement-of-leases/#link-ifrs_16_example_initial

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Hence this example starts in 2001, but is NOT outdated at all :)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 5% per annum

payments at the commencement of the lease:

20,000 Initial direct costs
(5,000) Lease incentives
50,000 Upfront lease payment for Q1 2001

50,000 Subsequent quarterly upfront payments

future payments
quarter (Q) payment date of payment discount factor discounted amount
2 50,000 4/1/2001 0.9880 49,402.08
3 50,000 7/1/2001 0.9761 48,804.79
4 50,000 10/1/2001 0.9642 48,208.27
5 50,000 1/1/2002 0.9524 47,619.05
6 50,000 4/1/2002 0.9410 47,049.60
7 50,000 7/1/2002 0.9296 46,480.75
8 50,000 10/1/2002 0.9183 45,912.64

Liability Schedule before reassessment of lease term

333,477.18 Lease liability at initial recognition

quarter (Q) opening payment discount

1 333,477 - 4,036
2 337,513 (50,000) 3,519
3 291,032 (50,000) 2,982
4 244,014 (50,000) 2,401
5 196,415 (50,000) 1,772
6 148,187 (50,000) 1,202
7 99,389 (50,000) 611
8 50,000 (50,000) -
quarterly payments)

low. In this variation, payments are made quarterly.

of-leases/#link-ifrs_16_example_initial_measurement_of_right-of-use_asset_and_lease_liability

001, 2002 etc. whenever a spreadsheet formula needs a valid format date as an input.

Asset Schedule before reassessment of lease term

Lease liability at initial recognition 398,477 Gross book value of the righ-of use asset at initial recognition

closing quarter (Q) NBV opening depreciation

337,513 1 398,477 (49,810)
291,032 2 348,668 (49,810)
244,014 3 298,858 (49,810)
196,415 4 249,048 (49,810)
148,187 5 199,239 (49,810)
99,389 6 149,429 (49,810)
50,000 7 99,619 (49,810)
- 8 49,810 (49,810)
415,000 Total payments
398,477 Depreciation expense
16,523 Discounting expense
415,000 Total expense
f lease term
use asset at initial recognition

NBV closing
348,668
298,858
249,048
199,239
149,429
99,619
49,810
-