CERTYNEX IFRS ACADEMY

Meridia, a lessee, applies IFRS 16 for the first time for the annual period beginning on 1 January 20X1 and presents a comparative period 20X0. It chooses the retrospective method with the cumulative effect of initial application recognised. Which treatment is correct?

It restates 20X0 as if IFRS 16 had always been applied and charges the cumulative effect to equity at 1 January 20X0.

It recognises the cumulative effect of initial application in profit or loss for 20X1.

It does not restate 20X0 and recognises the cumulative effect as an adjustment to the opening balance of retained earnings (or another component of equity) at 1 January 20X1.

It does not restate 20X0 and recognises the cumulative effect in retained earnings at 31 December 20X1.