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IFRS 16Workpapers (Step 4 of 5)

Workpaper template

Step 4 of 5
WorkpaperIFRS 16 — LeasesL1 · L2 · L3

Lessee initial measurement: lease liability and right-of-use asset

2 missions9 sections to document35 min
Prepared by
AI-assisted draft
Reviewed by
Not reviewed — human review required
Status
Published

Objective of the workpaper

List the lease payments not yet paid at the commencement date, discount them at the rate retained, determine the cost of the right-of-use asset (lease liability, advance payments less incentives, initial direct costs, restoration) and record the initial recognition entry.

9 sections · 33 blocks · 6 calculations · 1 entry

  • IFRS 16 §22
  • IFRS 16 §23
  • IFRS 16 §24
  • IFRS 16 §25
  • IFRS 16 §26
  • IFRS 16 §27
  • IFRS 16 §28
  • IFRS 16 §B42
  • IFRS 16 §B43
  • IFRS 16 §B44

Work this workpaper as a mission

Each case that uses this template opens in the mission workspace: data, analysis, calculation, entries, conclusion and review, with your progress saved.

2 instances from the cases: the calculations and entries below are run by the calculation engine.

File and entity
Office lease for the lessee: lease liability, right-of-use asset and first year
Case tasks documented here
  • Calculate the lease liability at the commencement date.
  • Calculate the cost of the right-of-use asset.
  • Which entry do you record at 1 January 20X1?
1

Inputs

Inputs

  • Lease (underlying asset, lease term retained, Term and rate workpaper)

    TextRequired

  • Commencement date of the lease

    DateRequired

    20X1-01-01

  • Lease payment not yet paid at the commencement date no. 1

    NumberRequired

    60,000

    Enter only the payments not yet paid at the commencement date, grouped by due date: fixed payments (including in-substance fixed payments) less lease incentives receivable, variable payments that depend on an index or a rate measured at the commencement date, amounts expected under a residual value guarantee, the exercise price of a purchase option reasonably certain to be exercised, termination penalties if the lease term reflects termination (paras. 26 and 27). Enter 0 for an unused row; the timing is expressed in the same periodicity as the rate.

  • Timing of payment no. 1 (number of periods from the commencement date)

    NumberRequired

    1 units

  • Lease payment not yet paid at the commencement date no. 2

    Number

    60,000

  • Timing of payment no. 2 (number of periods from the commencement date)

    Number

    2 units

  • Lease payment not yet paid at the commencement date no. 3

    Number

    60,000

  • Timing of payment no. 3 (number of periods from the commencement date)

    Number

    3 units

  • Lease payment not yet paid at the commencement date no. 4

    Number

    60,000

  • Timing of payment no. 4 (number of periods from the commencement date)

    Number

    4 units

  • Lease payment not yet paid at the commencement date no. 5

    Number

    60,000

  • Timing of payment no. 5 (number of periods from the commencement date)

    Number

    5 units

  • Periodic discount rate retained (interest rate implicit in the lease or lessee's incremental borrowing rate)

    NumberRequired

    4 %

  • Lease liability at the commencement date (sum of the present values)

    NumberRequired

    267,109.34

  • Lease payments made at or before the commencement date

    Number

  • Lease incentives received (deducted)

    Number

  • Initial direct costs of the lessee

    Number

    4,500

  • Estimated dismantling or restoration costs required by the lease (IAS 37 provision)

    Number

2

Supporting evidence

Evidence

  • Evidence obtained and referenced (category, document reference)

    EvidenceRequired

3

Recognition and composition of the amounts

Analysis

IFRS 16 §22IFRS 16 §23IFRS 16 §24IFRS 16 §25IFRS 16 §26IFRS 16 §27IFRS 16 §28IFRS 16 §B42IFRS 16 §B43IFRS 16 §B44

  • Payments included in the lease liability

    ChecklistRequired

    • Fixed payments, including in-substance fixed payments, less incentives receivable
    • Variable payments depending on an index or a rate, at their commencement date level
    • Amounts expected under residual value guarantees
    • Exercise price of a purchase option reasonably certain to be exercised
    • Termination penalties if the term reflects termination
    • Only payments not yet paid at the commencement date are discounted

  • Components of the cost of the right-of-use asset

    ChecklistRequired

    • Right-of-use asset and lease liability recognised at the commencement date, asset measured at cost
    • Lease payments made at or before commencement, less incentives received
    • Initial direct costs added
    • Restoration costs required by the lease, obligation measured under IAS 37 (unless producing inventories)
    • Costs of constructing or designing the underlying asset accounted for under other standards
4

Lease liability and cost of the right-of-use asset

Calculations

IFRS 16 §24IFRS 16 §26

  • Present value of payment no. 1

    CalculationRequired

    57,692.31

    Lease payment not yet paid at the commencement date no. 1 ; Periodic discount rate retained (interest rate implicit in the lease or lessee's incremental borrowing rate) ; Timing of payment no. 1 (number of periods from the commencement date)

  • Present value of payment no. 2

    Calculation

    55,473.37

    Lease payment not yet paid at the commencement date no. 2 ; Periodic discount rate retained (interest rate implicit in the lease or lessee's incremental borrowing rate) ; Timing of payment no. 2 (number of periods from the commencement date)

  • Present value of payment no. 3

    Calculation

    53,339.78

    Lease payment not yet paid at the commencement date no. 3 ; Periodic discount rate retained (interest rate implicit in the lease or lessee's incremental borrowing rate) ; Timing of payment no. 3 (number of periods from the commencement date)

  • Present value of payment no. 4

    Calculation

    51,288.25

    Lease payment not yet paid at the commencement date no. 4 ; Periodic discount rate retained (interest rate implicit in the lease or lessee's incremental borrowing rate) ; Timing of payment no. 4 (number of periods from the commencement date)

  • Present value of payment no. 5

    Calculation

    49,315.63

    Lease payment not yet paid at the commencement date no. 5 ; Periodic discount rate retained (interest rate implicit in the lease or lessee's incremental borrowing rate) ; Timing of payment no. 5 (number of periods from the commencement date)

  • Cost of the right-of-use asset

    CalculationRequired

    271,609.34

    Lease liability at the commencement date (sum of the present values) ; Lease payments made at or before the commencement date ; − Lease incentives received (deducted) ; Initial direct costs of the lessee ; Estimated dismantling or restoration costs required by the lease (IAS 37 provision)

5

Journal entries

Entries

  • Initial recognition by the lessee

    EntryRequired

    AccountDebitCredit
    Right-of-use asset271,609.34
    Lease liability267,109.34
    Cash (initial direct costs)4,500

    Teaching assumption: advance payments, direct costs and incentives received settled in cash at commencement; adapt the cash lines if an item is settled otherwise.

6

Discount rate

Judgment

IFRS 16 §26

  • Discount rate retained

    JudgmentRequired

    Lessee's incremental borrowing rate

    Interest rate implicit in the lease (readily determinable) / Lessee's incremental borrowing rate

  • Rationale: facts relied on, analysis, alternative rejected

    TextRequired

7

Conclusion

Conclusion

  • Initial lease liability and right-of-use asset supported

    ConclusionRequired

8

Financial statement impact

FS impact

  • Impact by caption, derived from the entries above (the Notes line refers to the disclosures)

    TableRequired

9

Normative references

References

  • Paragraphs cited in this workpaper (verification status shown from the register)

    References

10

Checks and financial statement impact

  • The lease liability equals the sum of the present valuesPass
  • The cost of the right-of-use asset is determinedPass
  • The initial recognition entry is balancedPass
Assets
267,109.34
Liabilities
267,109.34
Profit or loss
0
OCI
0
Equity
0