IFRS 16Chapter 12Lesson 1
Lessor: operating leases and lease modifications
Step 1 of 7Learning objectives
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In an operating lease, the lessor keeps the asset on its balance sheet, depreciates it and spreads the lease payments as income, generally on a straight-line basis, even when the contract includes a rent-free period or stepped rents. The lesson also covers initial direct costs, the absence of selling profit for a manufacturer, and then lease modifications on the lessor side: a new lease for an operating lease; a separate lease, a new lease or IFRS 9 for a finance lease.
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Learning objectives
- Calculate the straight-line lease income of an operating lease, including with a rent-free period or stepped rents, and the resulting accrued lease income.
- Identify the treatment of initial direct costs, depreciation and impairment of the leased asset, and the absence of selling profit for a manufacturer.
- Calculate the income of a modified operating lease, accounted for as a new lease from its effective date.
- Determine the treatment of a finance lease modification (separate lease, new operating lease, IFRS 9).