5/17/2023

Leases
Philippine Financial Reporting Standards
(PFRS) 16

Learning Objectives

• Identify a lease.
• Describe the general recognition and recognition exemption
relating to the accounting for leases by a lessee.
• State the lease classifications by a lessor.
• State the indicators of a finance lease.
• Describe the accounting for finance leases and operating leases
by a lessor.

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Objective

PFRS 16 establishes principles for the recognition,

measurement, presentation and disclosure of
leases, with the objective of ensuring that lessees and
lessors provide relevant information that faithfully
represents those transactions.

Scope
PFRS 16 Leases applies to all leases, including subleases, except for:

• leases to explore for or use minerals, oil, natural gas and similar non-
regenerative resources;
• leases of biological assets held by a lessee (see PAS 41 Agriculture);

• service concession arrangements (see IFRIC 12 Service Concession

Arrangements);
• licenses of intellectual property granted by a lessor (see PFRS 15 Revenue
from Contracts with Customers);
• and rights held by a lessee under licensing agreements for items such as
films, videos, plays, manuscripts, patents and copyrights within the scope
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of PAS 38 Intangible Assets
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Identifying a Lease

“A contract is, or contains, a lease if the contract conveys

the right to control the use of an identified asset for a
period of time in exchange for consideration.” (PFRS 16.9)

Right to Control

An entity has the right to control the use of an identified

asset if it has both of the following throughout the period
of use:
1. the right to obtain substantially all of the
economic benefits from use of the identified
asset; and
2. the right to direct the use of the identified asset.

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Identifying a Lease

Identified asset

• An asset can be identified by being explicitly stated in

the contract or by being implicitly specified at the
time the asset is made available for use by the customer.
• A portion of an asset can be identified if it is physically
distinct.

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Identified asset - Illustration

Customer X enters into a five-year contract with Supplier

Y for the use of a towing car. The specification of the car
is stated in the contract (brand, engine, capacity,
dimension, etc.
The towing car is readily available at the inception of the
contract.
Required: Is the towing an identified asset? Why?
Yes, it is identified by being explicitly specified in the
contract. 10

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Identified asset - Illustration

Customer X enters into a five-year contract with Supplier

Y for the use of a towing car. The specification of the car
is stated in the contract (brand, engine, capacity,
dimension, etc.
The towing car is not yet built at the inception of the
contract.
Required: Is the towing an identified asset? Why?
Yes, it is expected to be identifiable at the
commencement of the lease. 11

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Portions of Assets

A portion of an asset is an identified asset if it is

physically distinct (e.g a floor of a building)
It is not physically distinct, the portion is not an
identified asset, unless it represents substantially all
of the capacity of the asset thereby providing the
customer the right to obtain substantially all of the
economic benefits from the asset.

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Physically Distinct - Illustration

Customer X enters a 10-year contract with Supplier Y for the right

to use three fibres within a larger cable (consisting of 15 fibres)
connecting Country A and Country B.
The contract specifically identifies the 3 fibres within the 15 fibres
comprising the cable. The 3 fibres shall be used exclusively to
transmit Customer X’s data during the duration of the contract.
Required: Are the 3 fibres an identified assets? Why?
Yes, because they are physically distinct and explicitly specified
in the contract.
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NOT Physically Distinct -

Illustration
Customer X enters a 10-year contract with Supplier Y for the right to use
three fibres within a larger cable (consisting of 15 fibres) connecting Country
A and Country B.
The contract does not specifically identify the 3 fibres within the 15 fibres
comprising the cable. Instead, the contract requires Supplier Y to make
available for Customer X the equivalent capacity of 3 fibres all throughout
the duration of the contract, which could be any 3 of the 15 fibres. Supplier Y
make the decision as to which of the 15 fibres will be used in transmitting
Customer X’s data.
Required: Are the 3 fibres an identified assets? Why?
No, because they are not physically distinct. Moreover, the equivalent
capacity of the 3 fibres does not represent substantially all of the capacity of
the larger cable consisting of 15 fibres. 14

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Substantive substitution rights

• A customer does not have the right to use an identified asset if the supplier
has the substantive right to substitute the asset throughout the period of
use.

• A supplier’s right to substitute an asset is substantive if both of the

following conditions exist:
1. the supplier has the practical ability to substitute alternative assets
throughout the period of use; and

2. the supplier would benefit economically from the exercise of its

right to substitute the asset.

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Right to direct the use

The customer has the right to direct how and for what
purpose the asset is used throughout the period of use
if:
a. the customer has the right to direct how and for
what purpose the asset is used during the period of
use; or
b. the relevant decisions about how and for what purpose
the asset is used are predetermined.
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Right to direct the use

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Protective Rights

Protective rights include contractual restrictions

designed to protect the supplier’s interest in the asset or
its personnel, or to ensure compliance with laws or
regulations. Example:
• specify the maximum amount of use of an asset or limit
where or when the customer can use the asset,
• require a customer to follow particular operating practices,
or
• require a customer to inform the supplier of changes in how
an asset will be used. 18

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Identifying a Lease - Illustration

Customer X, engaged in quarrying constructions aggregates, enters into a

ten-year contract with Supplier Z for the use of 20 dump trucks of a
particular type.

The contract contains specifies the following:

• Supplier Z remains the owner of the specified trucks and shall provide
drivers for their operation and technicians for repairs and maintenance.

• The trucks are to be used for hauling excess materials from Customer X’s
mining site to any dumping site that Customer X will specify. Customer X
can also use the trucks to deliver construction aggregates to customers.
However, Customer X is prohibited from using the truck to transport toxic
wastes.
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Identifying a Lease –
Illustration Cont.
• Customer X operates 24/7 and 365 days a year. Thus, Supplier Z is
required to make all the specified trucks available at all times during the
duration of the contract.
• The trucks are to be kept in Customer X’s premises. If not in use, a truck
becomes idle. Supplier Z cannot retrieve any of the trucks other than for
reasons of default.
• If a truck needs to be serviced or repaired, Supplier Z is required to provide
a substitute truck of the same type.
Required: Does the ten-year contract with Supplier Z contains a lease?
Yes, because Customer X has the right to control the use of an identified
asset for a period of time.
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Identifying a Lease - Illustration

Customer X, a seller of “siomai” enters into a contract with Supplier Y to use

a space in Supplier Y’s mall to sell its goods. The contract states the amount
of space and that the space may be located at anu one of several areas within
the mall/ Supplier Y has the right to change the location of the space
allocated to Customer X at any time during the period of use. Changing the
space entails minimal cost to Supplier Y because Customer X uses a booth
that it owns and can be moved easily. There are many areas in the mall that
are available and would meet the specifications for the space in the contract.
Required: Does the contract with Supplier Y contains a lease?
No, because there is no identified asset. Customer X controls its booth but
the contract is for space in the mall, and this space can change at the
discretion of Supplier Y. Supplier Y’s substitution right is substantive.
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Lease term

Lease term comprises the following (PFRS 16.18):

• non-cancellable period of a lease,
• periods covered by an option to extend the lease – if the
lessee (customer) is reasonably certain to exercise that
option; and
• periods covered by an option to terminate the lease – if
the lessee (customer) is reasonably certain not to
exercise that option.
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Accounting for leases by Lessee

At the commencement date, a lessee (a customer)

recognizes
• a right-of-use asset and
• a lease liability

EXEMPTION : (for ‘short-term” and ‘low value’ leases)

• Lessee recognizes lease payments as expense over the lease term
using straight line basis, or another more appropriate basis.23

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Initial measurement of the

right-of-use asset
The right-of-use (‘RoU’) asset is measured at cost at the
commencement date. The cost of RoU comprises:
• the amount equal to the lease liability at its initial recognition,
• lease payments made at or before the commencement of the lease (less
any lease incentives received),
• any initial direct costs incurred by the lessee; and
• 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 (recognized under PAS 37).
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Initial measurement of the lease

liability
The lease liability should be initially recognized and measured at
the present value of the lease payments. Lease payments
comprise:
• fixed payments, less any lease incentives receivable,
• variable lease payments that depend on an index or a rate,
• amounts expected to be payable by the lessee under residual value
guarantees,
• the exercise price of a purchase option if the lessee is reasonably
certain to exercise that option; and
• payments of penalties for terminating the lease, if the lease term
reflects the lessee exercising an option to terminate the lease. 25

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Subsequent measurement of the

Right-of-Use asset
The right-of-use asset is measured subsequently at cost,
unless the lessee applies the fair value model in PAS 40
or revaluation model in PAS 16.
Cost Model
Depreciation
Impairment
Fair Value Model and Revaluation Model
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Cost Model

Under the cost model, a right-of-use asset is measured

initially at cost
a. less any depreciation and any accumulated
impairment losses
b. adjusted for any remeasurement of the lease liability
resulting from reassessments or lease modifications.

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Depreciation

• The right-of-use (‘RoU’) asset is depreciated in

accordance with PAS 16 requirements.
• depreciation period of RoU should not exceed the
lease term, unless
• the lease contract transfers ownership of the underlying asset
to the customer (lessee) by the end of the lease term or
• if the cost of the right-of-use asset reflects that the lessee will
exercise a purchase option.

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Impairment

• Right-of-use assets are subject to impairment under

PAS 36.
• Most often, RoU assets are a part of a CGU and
therefore are not tested for impairment individually

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Fair value and revaluation

model
• If a lessee applies fair value model to its investment
properties, the same accounting should be applied to
right-of-use assets that meet the definition of
investment property in PAS 40.
• If a lessee applies a revaluation model to PPE under
PAS 16, it may elect to apply this model to all of the
RoU assets that relate to the same class of PPE

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Subsequent measurement of the

lease liability
After the initial recognition, the measurement of a lease
liability is affected by:
1. accruing interest on the lease liability;
2. lease payments made; and
3. remeasurements reflecting any reassessment or lease
modifications.

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Accruing interest on the lease

liability
• Lease liabilities are measured on an amortized cost
basis using an effective interest method, similarly to
other financial liabilities.
• Interest is recognized in profit or loss unless it can be
capitalized under PAS 23.

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Lease payments

• Lease payments reduce the carrying amount of the

lease liability.
• Variable lease payments not included in the
measurement of the lease liability are recognized in
profit or loss in the period in which the event or
condition that triggers those payments occurs

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Remeasurements of the lease

liability
• Remeasurements of the lease liability are treated as adjustments to the
right-of-use asset.
• If the carrying amount is reduced to zero, any further reduction is
recognized immediately in profit or loss
• The lease liability is remeasured when
• there is a change in the assessment of a lease term, or
• there is a change in the assessment of an option to purchase the underlying
asset, or
• there is a change in the amounts expected to be payable under a residual value
guarantee, or
• there is a change in future lease payments resulting from a change in an index or a
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rate used to determine those payments
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General Recognition

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Initial Measurement -
Illustration
On January 1, 2021, Entity X enters into a 3-year lease of equipment
for an annual rent of Php100,000 payable at the end of each year. The
equipment has a remaining useful life of 10 years. The interest rate
implicit on the lease is 10%, while the lessee’s incremental borrowing
rate is 12%. Entity X uses the straight-line method of depreciation. The
relevant value factors are as follows
PV of an ordinary annuity of Php1 @10%, n=3 2.48685
PV of an ordinary annuity of Php1 @12%, n=3 2.40183
Required: How much is the initial measurements of lease liability
and right-of-use asset?
100,000 x 2.48685 = Php248,685 36

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Subsequent Measurement -
Illustration
On January 1, 2021, Entity X enters into a 3-year lease of equipment
for an annual rent of Php100,000 payable at the end of each year. The
equipment has a remaining useful life of 10 years. The interest rate
implicit on the lease is 10%, while the lessee’s incremental borrowing
rate is 12%. Entity X uses the straight-line method of depreciation. The
relevant value factors are as follows
PV of an ordinary annuity of Php1 @10%, n=3 2.48685
PV of an ordinary annuity of Php1 @12%, n=3 2.40183
Required: How much is the carrying amount of the right-of-use asset
at December 31, 2021?
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Subsequent Measurement -
Illustration
Annual Rent 100,000
PV of an ordinary annuity of
Php1 @10%, n=3 2.48685
Cost 248,685
Less: Accumulated Depreciation
(248,685 / 3yrs) x 1yr 82,895
Carrying amount 165,790

Note: The asset will be depreciated over the shorter of its useful
life (10yrs) and the lease term (3yrs).
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Recognition Exemption

• A lessee may elect not to apply the recognition

requirements for
• Short term leases
• Leases for which the underlying asset is of low value
• The lessee may elect to recognize the lease payments
associated with the above as an expense on a straight-
line basis over the lease term, unless another systematic
basis is more representative of the pattern of the lessee’s
benefit.
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Recognition Exemption -
Illustration
On January 1, 2021, Entity X enters into a 12-month lease of equipment for
an annual rent of Php120,000 payable at the end of each year. The
equipment has a remaining useful life of 10 years. The interest rate implicit
on the lease is 10%, while the lessee’s incremental borrowing rate is 12%.
Entity X uses the straight-line method of depreciation. The relevant value
factors are as follows
PV of an ordinary annuity of Php1 @10%, n=3 2.48685
PV of an ordinary annuity of Php1 @12%, n=3 2.40183
Required: How much is the initial measurements of lease liability and
right-of-use asset?
ZERO, Entity X recognizes the Php120,000 lease payment as
expenses in the period in which they incurred. 40

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Separating components of a
contract
Each lease and non-lease component in a contract should
be accounted for separately
Separate lease components Non-lease components
The right to use an underlying asset is a separate • A non-lease element is considered a separate
lease component if both the following criteria if it transfers goods or services to the
are met lessee. Example: utilities in a lease of a
a. the lessee can benefit from use of the building, or maintenance services in a lease of
underlying asset either on its own or together a car.
with other resources that are readily • Payment for activities that do not transfer
available to the lessee; and goods or services to the lessee are not a
b. the underlying asset is neither highly separate component of the contract.
dependent on, nor highly interrelated with, Example: administrative tasks, real property
the other underlying assets in the contract. taxes, insurance costs.

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Allocating consideration to
separate components
The consideration in the contract should be allocated to
each lease component on the basis of the relative
stand-alone price of the lease component and the
aggregate stand-alone price of the non-lease components.

Relative stand-alone price is the price that the

lessor or similar supplier would charge for a component
(or similar component) separately.
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Allocating consideration to separate

components - Illustraton
ABC Co. enters into a 3-year contract for three machines – a printer, a
binder, and electric power converter equipment. The binding machine can
be used on its own. However, the converter is necessary to run the printer.
ABC Co. would not lease a printer without a converter, and vice versa.

The contract requires fixed annual payments of Php240,000, itemized as

follows: Php225,000 rent for the three machines, Php11,000 for
maintenance, and Php4,000 for administrative tasks.
ABC Co. identifies the following stand-alone prices:
Binder 52,000 Maintenance of binder 4,000
Printer 180,000 Maintenance of printer 8,000
Converter 15,000 Maintenance of converter 1,000
Required: How much to be allocated to the non-lease components? 43

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Allocating consideration to separate

components - Illustraton
Stand-Alone Allocation of
Share
Prices 240K
Binder 52,000 20% 48,000 1
Printer & converter
195,000 75% 180,000 2
(180,000+15,000)
Maintenance
13,000 5% 12,000 3
(4,000+8,000+1,000)
TOTAL 260,000 100% 240,000

1.
1 Recognize a lease liability and RoU asset equal to the PV of Php48,000

2.
2 Recognize a lease liability and RoU asset equal to the PV of Php180,000
3.
3 Recognize the Php12,000 as maintenance expense at the end of
each year over the lease term.
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Accounting for leases by

LESSOR
A lessor must classify each of its leases as either an
a. operating lease or
b. a finance lease

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Classification of lease by the

lessor
1. Finance lease - a lease that transfers substantially
all the risks and rewards incidental to ownership of an
asset. Title may or may not eventually be transferred.
2. Operating lease - a lease other than a finance lease.

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Indicators of a finance lease

Any of the following will lead to finance lease classification:
1. The lease transfers ownership of the asset to the lessee by the end of the lease
term.
2. The lessee has the option to purchase the asset at a price that is expected to be
sufficiently lower than the fair value at the date of the option exercisability. It is
reasonably certain, at the inception of the lease, that the option will be exercised.
3. The lease term is for the major part of the economic life of the asset even if
the title is not transferred. (lease term is at least 75% of the useful life of the
leased asset)
4. At the inception of the lease the present value of the lease payments amounts to at
least substantially all of the fair value of the leased asset. (PV of minimum
lease payments is at least 90% of the FV of the leased asset at the inception)
5. The leased assets are of such a specialized nature that only the lessee can use 47
them without major modifications.
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Finance leases: initial

recognition and measurement
At the commencement of the lease, the lessor recognizes
a lease receivable at an amount equal to the net
investment in the lease
Gross Investment in the lease Net Investment in the lease
(Gross Lease Receivable) (Net Lease Receivable)
the sum of: the gross investment in the lease
a. the lease payments receivable discounted at the interest rate
by the lessor under a finance implicit in the lease
lease, and
b. any unguaranteed residual
value accruing to the lessor
DIFFERENCE
Unearned finance income (unearned interest income) 48

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Lease payments

• Fixed payments, including in-substance fixed payments, less

any incentives payable;
• Variable lease payments that depend on an index or a rate,
initially measured using the index or rate as at the
commencement date;
• Guaranteed residual value;
• The exercise price of purchase option if the lessee is reasonably
certain to exercise that option;
• Payments of penalties for terminating the lease, if the lease term
reflects the lessee exercising an option to terminate the lease. 49
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Finance leases: subsequent

measurement
The net investment in the lease (net lease receivable) is
subsequently measured similar to an amortized cost financial
asset. Accordingly:
• Finance income is recognized by the lessor over the lease term
using effective interest rate and recognize in profit or loss.
Finance income shall be recognized based on a pattern reflecting
constant periodic rate of return on the lessor’s net investment in
the lease. (Dr: Lease Receivable ; Cr: Finance Income P/L)
• Lease payments are applied against the gross investment in the
lease to reduce both the principle and the unearned finance
income. (Dr: Cash ; Cr: Lease Receivable)
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Finance Lease - Illustration

On January 1, 2021, Entity Y leases out an equipment to Entity X.
Information on the lease is as follows:
Lease term 3years
Annual rent payable at the end of each year 100,000
Interest rate implicit in the lease 10%
The lease provides for the transfer of ownership of the equipment to the
lessee at the end of the lease term. The relevant present value factor is as
follows:
PV factor of an ordinary annuity of 1 @10%, n=3 2.48685
Required: Provide the journal entry for the recognition of the lease
contract in the books of the lessor.
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Finance Lease - Illustration

Gross Investment Net Investment
Fixed lease payments 100,000 Fixed lease payments 100,000
Multiply by: Lease term 3 Multiply by: PV of ordinary
Total Lease Payments 300,000 annuity of 1 @10%, n=3 2.48685
Add; Unguaranteed residual value - Net Investment in the lease 248,685
Gross Investment in the lease 300,000

Gross Investment in the lease 300,000

Less: Net Investment in the lease 248,685
Unearned Interest Income 51,315

Lease Receivable 300,000

Equipment 248,685
Unearned Interest 51,315
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Finance Lease: subsequent

measurement - Illustration
On January 1, 2021, Entity Y leases out an equipment to Entity X.
Information on the lease is as follows:
Lease term 3years
Annual rent payable at the end of each year 100,000
Interest rate implicit in the lease 10%
The lease provides for the transfer of ownership of the equipment to the
lessee at the end of the lease term. The relevant present value factor is as
follows:
PV factor of an ordinary annuity of 1 @10%, n=3 2.48685
Required: Provide the journal entries for the annual collection of rent and
recognition of interest income.
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Finance Lease: subsequent

measurement - Illustration
Date Payment Interest Principal Present Value
Jan 01, 2021 248,685
Dec 31, 2021 100,000 24,869 75,132 173,554
Dec 31, 2022 100,000 17,355 82,645 90,909
Dec 31, 2023 100,000 9,091 90,909 - 0
300,000 51,315 248,685

Annual Rental Recognition of Interest Income

2021 2021
Cash 100,000 Unearned Interest Income 24,869
Lease Receivable 100,000 Interest Income 24,869

2022 2022
Cash 100,000 Unearned Interest Income 17,355
Lease Receivable 100,000 Interest Income 17,355

2023 2023
Cash 100,000 Unearned Interest Income 9,091
Lease Receivable 100,000 Interest Income 9,091
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Operating leases

When a lease is classified as operating lease, the

underlying asset stays in the statement of financial
position of the lessor and is presented according to its
nature.

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Accounting for Operating Lease

The lessor recognizes lease payments from operating

leases as income on straight-line basis, unless another
systematic basis is more representative of the pattern in
which benefit from the use of the underlying asset is
diminished

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Finance Lease - Illustration

On January 1, 2021, Entity Y leases out an equipment to Entity X. Information on the lease
is as follows:
Lease term 3years
Annual rent payable at the end of each year 100,000
Interest rate implicit in the lease 10%
The lease provides for that there is no transfer of ownership of the equipment to the lessee
at the end of the lease term. The relevant present value factor is as follows:

PV factor of an ordinary annuity of 1 @10%, n=3 2.48685

Required: How much is the lease receivable to be recognized by the lessor at January 1,
2021?

ZERO, the lease contract is an operating lease. Therefore, annual lease

payments shall be recognized as income in the periods in which they are
earned. 57

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Lease of Land and Building

When a lease includes both land and buildings elements,

a lessor assesses the classification of each element as
finance lease or an operating lease separately.
Lease payments are allocated between the land and
building elements in proportion to the relative fair
value of the leasehold interests in the land and
building elements at the inception of the lease.

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Subleases

Sublease is a transaction for which an underlying asset is

released by a lessee (“intermediate lessor”) to a third
party, and the lease (“head lease”) between the head
lessor and lessee remains in effect.

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Accounting for Subleases

An intermediate lessor shall classify the sublease as a

finance lease or an operating lease as follows:
a. if the head lease is a short-term lease that the
entity, as a lessee, has accounted for using the
practical expedient, the sublease is classified as an
operating lease.
b. otherwise, the sublease is classified by reference to
the right-of-use asset arising from the head lease,
rather than by reference to the underlying asset.
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Sale and Leaseback

Transactions
A sales and leaseback transaction occurs when a party
sells an asset and immediately leases it back from the
buyer.

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Accounting for Sale and

Leaseback Transactions
The seller-lessee should determine whether the
transfer of an asset is a sale based on the
requirements for satisfying obligation in PFRS 15.

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Accounting for transfer of the

asset that is a sale
The seller/lessee shall:
a. measures 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
b. Gain or loss is recognized only at the amount that relates to the rights
transferred to the buyer-lessor.

The buyer/lessor shall:

• account for the purchase of an asset according to applicable PFRS (e.g.
PAS 2, PAS 16, PAS 38) and accounts for the lease using lease
requirements included in PFRS 16.
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Fair value of consideration

different from fair value of the asset

• If the fair value of the consideration for the sale of the

asset is different from the fair value of the asset, or
• If the payments for the lease are not at market rates, an
entity makes the following adjustments

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Fair value of consideration

different from fair value of the asset

The entity shall make the following adjustments to

measure the sale proceeds at fair value:
• any below-market terms are treated as a
prepayment of lease payments
• any above-market terms are treated as additional
financing provided by the buyer-lessor to the seller-
lessee

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Fair value of consideration

different from fair value of the asset

The adjustments is measured on the basis of the more

readily determinable of
• the difference between the fair value of the
consideration for the sale and the fair value of the asset
or
• 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.
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Transfer of the asset is not a sale

If the transfer of the asset is not a sale under IFRS 15

requirements, the parties shall account for it as a
financing transaction.
• the seller/lessee continues to recognize the asset and
accounts for the amounts received as financial
liability under PFRS 9.
• the buyer/lessor does not recognize the transferred
asset and accounts for the amounts paid as financial
asset under PFRS 9.
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Presentation: Statement of
Financial Position
RoU assets are presented either:
a. Separately from other assets
b. Together with other assets as if they were owned,
with disclosure of the line items that include the RoU
assets.

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Presentation: Statement of
Financial Position
Lease liabilities are presented either:
a. Separately from other liabilities
b. Together with other liabilities, with disclosure of
the line items that include the lease liabilities.

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Presentation: Statement of Profit or

Loss and Other Comprehensive Income

• Depreciation and interest expense are presented

separately (i.e, offsetting is prohibited).
• Interest expense on the lease liability should be
included in finance costs.

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Disclosures
The entity is expected to present both qualitative and quantitative disclosures regarding
their leasing activities for the respective reporting period(s).

The quantitative disclosures required by PFRS 16 for lessees include but are not limited to:
• The carrying amount of all ROU assets summarized by asset class as of the end of the reporting
period
• ROU asset depreciation expense, summarized by asset class for the reporting period
• Total interest expense on lease liabilities for the reporting period
• Expenses from short-term leases not included on the balance sheet as of the end of the reporting
period
• Expenses from low-value asset leases not included on the balance sheet as of the end of the reporting
period or in the expense summary of short-term leases for the reporting period
• Expenses from variable lease payments excluded from the lease liability calculation
• Sublease income for the reporting period
• Any gains or losses recognized from sale-leaseback transactions
• Total cash outflows for leases
• Any ROU asset additions
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• A maturity analysis of all lease liabilities as of the end of the period

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Disclosures

The lessee is required to disclose certain qualitative

information to help financial statement users understand
the entity’s leases and leasing activities, including the
following:
• Summary of leasing activities
• Commitments for leases not yet commenced (i.e. a liability is
not yet recorded on the balance sheet)

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