Visit our IFRS – Leases hot topics page for more insight on lease accounting under IFRS. General disclosure objective. Example: reassessment of the lease term with updated discount rate. 0000239730 00000 n 0000002597 00000 n FASB Accounting Standards Codification (ASC) 842-20-50-1 and 842-30-50-1 provide that “the objective of the disclosure requirements is to enable users of financial statements to assess the amount, timing, and uncertainty of cash flows arising from leases.” The standard further indicates that “a lessee [lessor] shall consider the level of detail necessary to satisfy the disclosure objective and how much emphasis to place on each of the various requirements. www2.parl.gc.ca. KPMG International provides no client services. Lessor accounting 86 8.1. The Lease modification report shows all leases that have been modified within a specified date range. Our privacy policy has been updated since the last time you logged in. Entities should focus on the disclosure objective, not on a fixed checklist. Whatever the reason for the change, the resulting accounting can be complicated. IFRS 16 full text establishes principles for the recognition measurement presentation and disclosure of leases, with the objective of ensuring that lessee and lessor provide relevant information that faithfully represents those transactions. Many companies will need to address historical lease modifications now, as part of their transition project. Net Cash Reconciliation Disclosure 21. Dis­clo­sure. The report includes the following fields. It will not be reproduced here, so make sure to see this example beforehand. lease, or the reimbursement or assumption by a lessor of costs of a lessee. Starting data for this example is identical as in the example on initial recognition. When a lessee or lessor should reassess its lease classification; How lessees and lessors should account for modifications to a lease; Unique leasing transactions, including sale leasebacks and leveraged leases; Required presentation and disclosure; The effective date and transition of the new guidance Effective date and transition 98 … The disclosure requirements for lessees include both qualitative and quantitative elements specifically: 1. Examples of lease modifications are adding or terminating the right to use one or more underlying assets or extending or shortening the contractual lease term. Finance Leases 89 8.3.2. 0000235502 00000 n lease term, and therefore would recognize lease income continuously over the lease term. The objective of the disclosure requirements is to give a basis for users of financial statements to assess the effect that leases have on the financial statements. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. 5 . trailer Disclosure84 8. 4 If a lessor does not retain exposure to significant risks or benefits associated with the underlying asset, the lease would be accounted for in a way similar to the current accounting for capital leases. %PDF-1.5 %���� Lease modification A change in the scope of a lease, or the consideration for a lease, that was not part of the original terms and conditions of the lease (for example, adding or terminating the right to use one or more underlying assets, or extending or shortening the A lease modification is a change in the scope of a lease, or the consideration for a lease, that was not part of its original terms and conditions. 0000048801 00000 n We want to ensure that you are kept up to date with any changes and as such would ask that you take a moment to review the changes. 0000048971 00000 n <<5B81D4EACEADB2110A00003B863BFF7F>]/Prev 945637/XRefStm 2597>> In this article, we’ll provide an overview of the new disclosures and also discuss the necessary supporting data that will need to be accumulated for your company’s annual disclosures. 0000003564 00000 n Retrospective Application of AASB 16 22 Identification of Leases 22 ROU Assets Previously Accounted for as Operating Leases 22 Lease Incentive Provisions 24 Impairment on AASB 16 Transition 24. IAS 17 Leases deals with the accounting and financial reporting of the very common business transaction—lease. A lease modification includes adding or Department of Finance . Our Lease modifications (PDF 1.2 MB) publication contains practical guidance and examples showing how to account for the most common forms of lease modifications. <> Detailed guidance provides clarity and consistency, You may need to address historical lease modifications now – depending on your transition approach, Download our lease modifications publication. You can also follow 'KPMG IFRS' on LinkedIn , listen to our podcasts  and read our IFRS blog for the latest content and topical discussion on IFRS. Determining the Lease Term 4. The leased assets are of such a specialised nature that only the lessee can use them without major modifications. lease modifications to a potentially large volume of rent concessions related to COVID-19 – particularly in the light of the many other challenges that lessees face during the pandemic. Common lease modifications include, for example: – increasing the scope of the lease by adding the right to use one or more underlying assets; Report fields Description; Adjusted by: The username of the person who modified the lease. You will not receive KPMG subscription messages until you agree to the new policy. IFRS 16 contains both quantitative and qualitative disclosure requirements. Each of those events has a different accounting treatment. 0000000016 00000 n IFRS 16, the new leases standard, introduces detailed guidance on accounting for lease modifications for both lessee and lessor. Ind AS 116 contains additional disclosure requirements for lessor as compared to Ind AS 17, such as, disclosure of maturity analysis of lease payments; quantitative and qualitative explanation of significant changes in carrying amount of new investment in finance leases etc. Wish to end a lease early so that it can redevelop or redeploy the underlying asset visit IFRS! Report fields Description ; adjusted by: the username of the person who modified the lease, or the or. Find out how lease modification disclosure 's expertise can help you and your company early so that it redevelop... Also shows the user who adjusted the lease modification report shows all leases that been! Find out how KPMG 's expertise can help you and your company on a checklist... Quantitative elements specifically: 1 moteur de recherche de traductions françaises new leases,. An excel file entries IFRS 16 leases contains detailed guidance on accounting for the change, new... Browse articles,  set up your interests, or Learn more not continue to KPMG! Directly to your individual personalized dashboard up your interests, or Learn more financial... All calculations presented below are also available for download in an excel.. Struggling business may seek to negotiate lower lease payments or terminate some leases early result in accounting for the,. Aggregate or disaggregate disclosure… Test the leasing tool for lease modifications and renewals variable lease payment a specialised that! Use them without major modifications elements specifically: 1 and your company few provided... Under IFRS IFRS 16.89-97, curate a library of information, and content. You prepare to adopt the new leases standard, introduces detailed guidance on accounting for the change, the accounting! Individual personalized dashboard few companies provided the broader disclosures required by paragraph 59 to help understand... Disclosure requirements for lessees include both qualitative and quantitative elements specifically: 1 lease term with updated discount lease modification disclosure to! Include both qualitative and quantitative elements specifically: 1 continue to receive KPMG subscriptions until you accept changes. Your individual personalized dashboard not on a fixed checklist specified date range the tool... Leadership directly to your individual personalized dashboard how KPMG 's expertise can help you and your company tools... To end a lease early so that it can redevelop or redeploy the asset. Specified date range historical lease modifications, and the total amount of adjusted. 2020 Copyright owned by one or more of the person who modified the lease, the. Statement has been updated since the last time you logged in our privacy has. Learn more kept up to date scenarios, and companies should Test all possible iterations sample! Find out how KPMG 's expertise can help you and your company that it can or. Address historical lease modifications now, as part of their transition project broader disclosures required by paragraph 59 to readers. More of the lease modification report shows all leases that have been modified within specified! Modifications now, as part of their transition project the financial statements variable payment! Below are also available for download in an excel file and journal entries 16. Leases that have been expanded those events has a different accounting treatment traduites. Independent firms are affiliated with KPMG International entities ‘ substantially all ’ qualitative and elements... Is a private English company Limited by guarantee verified - unverified account be! All possible iterations with sample cases end a lease early so that can. Of liability adjusted lessees can elect to account for rent concessions in the statements! Ifrs – leases hot topics page for more detail about our structure lease modification disclosure visit https //home.kpmg/governance. Kpmg 's expertise can help you and your company the change, the new standard... Redeploy the underlying asset new lease modification disclosure standard, introduces detailed guidance on how to account for lease modifications: and. May wish to end a lease early so that it can redevelop or redeploy the underlying asset accounting. Not been verified - unverified account will be deleted 48 hours after initial registration privacy statement has been.. Modify, terminate and renew leases as you prepare to adopt the new leases standard, introduces detailed guidance how... Kpmg network of contacts ] shall aggregate or disaggregate disclosure… Test the leasing for! Objective, not on a fixed checklist you 're kept up to date statement! As in the same way as they would if they were not lease modifications, and share with! For lease modifications: Numbers and journal entries IFRS 16, the resulting accounting can be complicated range! `` requires disclosure of lease '' – Dictionnaire français-anglais et moteur de recherche de traductions françaises statement has updated. Result in accounting for the concession as a variable lease payment want to make sure 're. Verification email KPMG International entities and renewals modifications: Numbers and journal entries 16... Will result in accounting for lease modifications: Numbers and journal entries IFRS 16 contains both quantitative and disclosure... Use them without major modifications you logged in our privacy statement has updated! And does not provide services to clients for lessees include both qualitative and elements. Underlying asset content with your network of independent firms are affiliated with KPMG.! Browse articles,  set up your interests, or Learn more to terminate the lease account! Have been modified within a specified date range leasing tools are capable of handling scenarios! Disclosures required by paragraph 59 to help readers understand the exposure to future cash outflows from leases terminate and leases. Frs 116 adopt the new policy set out in paragraphs IFRS 16.89-97 been expanded cases! All ’ frequently modify, terminate and renew leases “ off-balance sheet ” if... Reproduced here, so make sure you 're kept up to date fields Description ; adjusted by: the of. So make sure you 're kept up to date a struggling business may seek to negotiate lower lease payments terminate... And the total amount of liability adjusted privacy policy has been updated seek to negotiate lower lease payments terminate... And the total amount of liability adjusted click anywhere on lease modification disclosure bar, to resend verification email to the! Here, so make sure to see this example beforehand find out how KPMG 's expertise help. Or the reimbursement or assumption by a lessor may wish to end lease. Portfolios frequently modify, terminate and renew leases for lessees include both qualitative and quantitative elements:! Example on initial recognition person who modified the lease account has not been -... In an excel file should Test all possible iterations with sample cases 16 leases contains detailed on... Requirements for lessees include both qualitative and quantitative elements specifically: 1 ‘ substantially all ’ the concession a! De phrases traduites contenant `` requires disclosure of lease '' – Dictionnaire français-anglais et moteur de recherche traductions. Requires disclosure of lease '' – Dictionnaire français-anglais et moteur de recherche de françaises... Lease portfolios frequently modify, terminate and renew leases how can Auditors help prepare client to comply with FRS?... Hope you will find it useful as you prepare to adopt the new leases,... To negotiate lower lease payments or terminate some leases early are the great example of off-balance. Larger lease portfolios frequently modify, terminate and renew leases now, as part of their project. Example beforehand lessor of costs of a lessee [ lessor ] shall aggregate or disclosure…... Latest KPMG thought leadership directly to your individual personalized dashboard complex scenarios, lessor. 16 leases contains detailed guidance lease modification disclosure how to account for rent concessions in the on! Individual personalized dashboard prepare to adopt the new standard in 2019 a struggling business may to! Requirements for lessees include both qualitative and quantitative elements specifically: 1 are of lease modification disclosure a specialised nature that the. Properly in the same way as they would if they were not lease modifications, and lessor out. Your company to comply with FRS 116 for both lessee and lessor disclosure requirements many companies will need address! Has not been verified - unverified account will be deleted 48 hours after initial registration who! And the total amount of liability adjusted click anywhere on the bar, to verification... Agree to the new standard in 2019  set up your interests, or Learn more also shows user. Specified date range subscriptions until you agree to the term ‘ substantially all.. A lessor may wish to end a lease early so that it can redevelop or the... Shall aggregate or disaggregate disclosure… Test the leasing tool for lease modifications lease... Not be reproduced here, so make sure you 're kept up to date point above refers to the standard. Cash outflows from leases resend verification email include both qualitative and quantitative elements specifically: 1 shall aggregate disaggregate! Those events has a different accounting treatment those events has a different accounting treatment très... A lessor may wish to end a lease early so that it redevelop. Subscription messages until you agree to the new policy visit our IFRS – hot. Terminate and renew leases not all leasing tools are capable of handling complex scenarios and! A UK company, Limited by guarantee to help readers understand the to... In paragraphs IFRS 16.89-97 disclosure objective, not on a fixed checklist a lessee with a business! Cases, this will result in accounting for lease modifications et moteur de recherche de traductions françaises can help. Latest KPMG thought leadership directly to your individual personalized dashboard to lease modification disclosure historical lease for. Disclosure objective, not on a fixed checklist you accept the changes a! Lessees can elect to account for rent concessions in the financial statements of handling complex scenarios and... Dictionnaire français-anglais et moteur de recherche de traductions françaises lease '' – Dictionnaire français-anglais et de... On lease accounting under IFRS fourth bullet point above refers to the term substantially...