last updated: 1/20/2019

IFRS 16 example: reassessment of the lease term with updated discount rate

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_reass

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Hence this example starts in 2001, but is NOT outdated at all :)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

5%
payments at the commencement of the lease
20,000 Initial direct costs
(5,000) Lease incentives
50,000 Upfront lease payment for year 2001

future payments
payment date of paymentdiscount factor discounted amount
1 50,000 1/1/2002 0.9524 47,619.05
2 50,000 1/1/2003 0.9070 45,351.47
3 50,000 1/1/2004 0.8638 43,191.88
4 50,000 1/1/2005 0.8227 41,135.12
5 50,000 1/1/2006 0.7835 39,176.31
6 50,000 1/1/2007 0.7462 37,310.77
7 50,000 1/1/2008 0.7107 35,534.07
8 50,000 1/1/2009 0.6768 33,841.97
9 50,000 1/1/2010 0.6446 32,230.45
355,391.08
Liability Schedule before reassessment of lease term
355,391.08 initial recognition

year opening (1 Jan) payment (1 Jan) discount

2001 355,391 - 17,770
2002 373,161 (50,000) 16,158
2003 339,319 (50,000) 14,466
2004 303,785 (50,000) 12,689
2005 266,474 (50,000) 10,824
2006 227,298 (50,000) 8,865
2007 186,162 (50,000) 6,808
2008 142,971 (50,000) 4,649
2009 97,619 (50,000) 2,381
2010 50,000 (50,000) -
94,609
 Journal: Dr. Cr.
Right-of use Aset 420,391
Cash 65,000
Lease Liabilities 355,391

Liability Reassessment of lease term

year payment discount factor discounted amount

0 2007 50,000 1.0000 50,000
1 2008 50,000 0.9434 47,170
2 2009 50,000 0.8900 44,500
3 2010 50,000 0.8396 41,981
4 2011 55,000 0.7921 43,565
5 2012 55,000 0.7473 41,099
6 2013 55,000 0.7050 38,773
7 2014 55,000 0.6651 36,578
8 2015 55,000 0.6274 34,508

378,174

Entries made at the reassessment date

DR CR
192,011 Right-of-use asset
192,011 Lease liability

Liability Schedule after reassessment of lease term

year opening (1 Jan) payment discount

2007 378,174 (50,000) 19,690
2008 347,864 (50,000) 17,872
2009 315,736 (50,000) 15,944
2010 281,680 (50,000) 13,901
2011 245,581 (55,000) 11,435
2012 202,016 (55,000) 8,821
2013 155,837 (55,000) 6,050
2014 106,887 (55,000) 3,113
2015 55,000 (55,000) -
96,826
om under direct link below:

nt-of-leases/#link-ifrs_16_example_reassessment_of_lease_term_updated_discount_rate

2001, 2002 etc. whenever a spreadsheet formula needs a valid format date as an input.

Aset hak guna 420,391

Liabilitas sewa
Kas

Beban bunga 17,770

Liabilitas sewa
Beban depresiasi 42,039
Akumulasi depresiasi

Asset Schedule before reassessment of lease term

nitial recognition 420,391 gross book value

closing (31 Dec) year NBV opening (1 Jan) depreciation

373,161 2001 420,391 (42,039)
339,319 2002 378,352 (42,039)
303,785 2003 336,313 (42,039)
266,474 2004 294,274 (42,039)
227,298 2005 252,235 (42,039)
186,162 80,771 2006 210,196 (42,039)
142,971 2007 168,156 (42,039)
97,619 2008 126,117 (42,039)
50,000 2009 84,078 (42,039)
- 2010 42,039 (42,039)
(420,391)
 515,000 Total payments Dr.
420,391 Depreciation expense 12/31/2001 Interest expense 17,770
94,609 Discounting expense Lease liabilities
515,000 Total expense Depreciation expense 42,039
Acc. Dep. ROU Asset
1/1/2001 Lease liabilities 50,000
Cash
6% revised discount rate

discounted amount

liability at the end of year 2006 after reassessment

Asset Schedule after reassessment of lease term

360,168 gross book value

closing (31 Dec) year NBV opening (1 Jan) depreciation

347,864 2007 360,168 (40,019)
315,736 2008 320,149 (40,019)
281,680 2009 280,130 (40,019)
245,581 2010 240,112 (40,019)
202,016 2011 200,093 (40,019)
155,837 2012 160,075 (40,019)
106,887 2013 120,056 (40,019)
55,000 2014 80,037 (40,019)
- 2015 40,019 (40,019)
(360,168)

790,000 Total payments

612,402 Depreciation expense
177,598 Discounting expense
790,000 Total expense
 355,391.08
65,000.00

17,770

42,039

lease term

NBV closing (31 Dec)

378,352
336,313
294,274
252,235
210,196
168,156 (252,235)
126,117
84,078
42,039
-
Cr.

17,770

42,039

50,000

NBV closing (31 Dec)

320,149
280,130
240,112
200,093
160,075
120,056
80,037
40,019
-