BLM17010 - IFRS 16 accounting: Scope and exemptions
Scope
For entities applying IFRS 16, all leases are within the scope of IFRS 16, except for:
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leases to explore for or use minerals, oil, natural gas and similar non-regenerative resources;
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leases of biological assets within the scope of IAS 41 Agriculture held by a lessee;
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Service concession arrangements within the scope of IFRIC 12 Service Concession Arrangements;
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licences of intellectual property granted by a lessor within the scope of IFRS 15 Revenue from Contracts with Customers; and
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rights held by a lessee under licensing agreements within the scope of IAS 38 Intangible Assets for such items as motion picture films, video recordings, plays, manuscripts, patents and copyrights.
Exemptions
A lessee may elect not to apply the requirements of IFRS 16 for short-term leases and leases for which the underlying asset is of low value.
The election for short-term leases can be made by class of asset. The election for low-value leases can be made on a lease-by-lease basis.
A short term lease is defined as a lease that at commencement date has a lease term of 12 months or less. A lease that contains a purchase option is not a short term lease.
No specific value is included within the standard for low value assets. Examples of low-value underlying assets can include tablet and personal computers, small items of office furniture and telephones (IFRS 16 B8).
If a lessee elects to take the exemptions, the lease payments associated with those leases are to be recognised as an expense on either a straight-line basis over the lease term, or some other systematic basis.