IFRS 16Chapter 1Lesson 2
The two lessee exemptions: short-term and low-value leases
Step 1 of 7Learning objectives
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When a lessee may avoid recognising a right-of-use asset and a lease liability: short-term leases (choice by class of underlying asset) and low-value assets (choice lease by lease), conditions to check, straight-line or other systematic expense, and year-end entries.
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Learning objectives
- Identify the lessee's two optional exemptions and the level at which each choice is made.
- Check that a lease is short-term (12 months or less, no purchase option) and draw the consequences of a modification.
- Determine whether an asset is of low value by reasoning on its value when new, in absolute terms, and ruling out excluded cases (dependence, nature, sublease).
- Calculate the expense of an exempt lease and record the year-end entries (accrued or prepaid expense).