CERTYNEX IFRS ACADEMY

Optiflux leases 120 sensors for four years, each with a modest price when new. These sensors work only once integrated into a measurement line that Optiflux also leases; they are highly interrelated with each other and with that line. Analysis by the management controller: (1) each sensor, taken individually, has a modest price when new; (2) the low-value election may be made lease by lease; (3) it does not matter that the sensors can only work when integrated into the line: the exemption applies; (4) the payments for the sensors are recognised as an expense on a straight-line basis. Which step contains the error?

Step 1: the price of a sensor must be assessed on its current value and not when new.

Step 2: the low-value election is made by class of underlying asset.

Step 3: an asset that is highly dependent on, or highly interrelated with, other assets cannot be of low value.

Step 4: the payments of an exempt lease are recognised as an expense when paid.