Leasing & IFRS 16

[Escapee..]

Hi to all on this lovely Monday

 

So looks like all Off Balance Sheet financing is history...

 

I would like to know from the accounting guys...are there any loopholes especially on the vehicle leasing side?

 

Some suppliers are proposing short term leasing (under 12 months) and then renewing again or leasing via a broker so it will sit on brokers balance sheet and end-user then "rents" on a month to month basis from broker.

 

Is it worthwhile looking at these options or are you just looking for trouble?

 

 

 

[Prince]

The only real manageable is a short term lease ie less than 12 months or if the underlying asserts is of low value. Everything else gets capitalized.

[Patensie]

Lease cheap vehicles (under $5k fair value   )

 

Management has to consider the likelihood that the lease will be extended or renewed and then estimate the lease term taking probable extensions/renewals into account. The IASB thought about this scenario. Just capitalise the right of use asset.

 

Unless you'd can report under IFRS for SMEs.

[sirmoun10goat]

I feel IFRS16 is quite encompassing - even sale and leasebacks, although allowed, don't result in pretty balance sheets anymore.

 

I think the regulators achieved what they wanted.