Presentation by the lessee

Learning objectives

• Identify the presentation of right-of-use assets and lease liabilities in the statement of financial position (separate line item or disclosure in the notes), of interest separately from depreciation, and of cash flows in the statement of cash flows (principal in financing, interest under IAS 7, exempt and variable payments in operating activities).L2, L3

Normative references

• IFRS 16 §47The lessee presents in the statement of financial position, or discloses in the notes, right-of-use assets separately from other assets and lease liabilities separately from other liabilities. If it does not present them in separate line items, it includes them within the line item in which the corresponding underlying assets would be presented if they were owned, and discloses which line items include those right-of-use assets and lease liabilities.
• IFRS 16 §48The separate presentation requirement in paragraph 47(a) does not apply to right-of-use assets that meet the definition of investment property, which are presented in the statement of financial position as investment property.
• IFRS 16 §49In the statement of profit or loss and other comprehensive income, the lessee presents interest expense on the lease liability separately from the depreciation charge for the right-of-use asset. Until IFRS 18 applies, that interest expense is part of finance costs, which are presented separately. With IFRS 18 (annual periods beginning on or after 1 January 2027), interest expense on the lease liability, identified under para. 36(a), is classified in the financing category of the statement of profit or loss (IFRS 18, para. 61).
• IFRS 16 §50In the statement of cash flows, the lessee classifies cash payments for the principal portion of the lease liability within financing activities, and cash payments for the interest portion applying the requirements in IAS 7 for interest paid. Payments for short-term leases, leases of low-value assets and variable lease payments not included in the lease liability are classified within operating activities.

Original summaries of the paragraphs (reference register), never a quotation of the standard.

10 questions

• Quintal wonders how to present its lease liabilities. Which statement is accurate?L2
• The carrier Dunelle does not present its right-of-use assets on a separate line in the statement of financial position. These rights relate to trucks it leases. Where must it include them?L2
• The property company Ombrelle leases an office building that it fully subleases to third parties; according to the analysis provided, the corresponding right-of-use asset meets the definition of investment property. How is this right-of-use asset presented in the statement of financial position?L2
• Pervenche is preparing its statement of profit or loss and other comprehensive income. Which statements on the presentation of expenses relating to its leases recognised in the statement of financial position are accurate? (several answers)L2
• Galion pays each year the rent for a warehouse recognised in the statement of financial position. In its statement of cash flows, how does it classify the part of the payment that repays the principal portion of the lease liability?L3
• The Hespéride group analyses its lease-related cash outflows for the year. Which payments does it classify within operating activities in its statement of cash flows? (several answers)L3
• In 20X3, Lunaire paid 120,000 under its leases recognised in the statement of financial position, of which 18,000 relates to interest on the lease liabilities. It also paid 9,000 for exempt short-term leases and 4,000 of variable payments not included in the lease liability. What amount does it present within financing activities for the repayment of the principal of lease liabilities?L3
• In Saphir's draft statement of profit or loss, a Lease expenses line of 260,000 combines 205,000 of depreciation of right-of-use assets and 55,000 of interest on lease liabilities. The CFO argues that this presentation is clearer. What correction does the auditor request?L3
• Cordial includes its lease liabilities in the Borrowings line and its right-of-use assets in the Property, plant and equipment line, without presenting them on separate lines. What information is missing to comply with IFRS 16?L3
• Orphée's controller reviews a checklist on lessee presentation of leases. Which statements are accurate? (several answers)L3