Lessor accounting: classification, finance lease and operating lease

• Lease analysed by the lessor (underlying asset, lessee, key clauses)

  TextRequired

• Inception date of the lease

  DateRequired

  20X1-01-01

• Fair value of the underlying asset at the inception date

  NumberRequired

  507,000

• Economic life of the underlying asset (in years)

  NumberRequired

  6 years

• Lease term (in years)

  NumberRequired

  5 years

• Lease payment receivable no. 1

  NumberRequired

  115,220

  Payments not received at the commencement date: fixed payments (including in substance) less incentives payable, variable payments that depend on an index or a rate, residual value guarantees received, the exercise price of a purchase option reasonably certain to be exercised, termination penalties (para. 70). Enter 0 for an unused row.

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

  NumberRequired

  1 units

• Lease payment receivable no. 2

  Number

  115,220

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

  Number

  2 units

• Lease payment receivable no. 3

  Number

  115,220

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

  Number

  3 units

• Lease payment receivable no. 4

  Number

  115,220

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

  Number

  4 units

• Lease payment receivable no. 5

  Number

  115,220

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

  Number

  5 units

• Interest rate implicit in the lease (periodic)

  NumberRequired

  7 %

• Present value of the lease payments (sum of the values below)

  NumberRequired

  472,424.75

• Unguaranteed residual value accruing to the lessor

  Number

  52,000

• Timing of the residual value (number of periods from the commencement date)

  Number

  5 units

• Finance lease: net investment in the lease (discounted payments and residual value)

  Number

  509,500

  Finance lease only. The implicit rate is defined so that it includes the initial direct costs (para. 69): for a lessor that is neither a manufacturer nor a dealer, the net investment equals fair value plus those costs. When the rate provided is rounded, the sum of the present values may differ from it by a few cents: the check accepts a difference of up to 1.

• Lessor other than a manufacturer or dealer: carrying amount of the underlying asset derecognised

  Number

  507,000

  To be entered only for a lessor that is neither a manufacturer nor a dealer: the datum drives the initial recognition entry of the finance lease.

• Lessor's initial direct costs (included in the net investment)

  Number

  2,500

• Net investment at the beginning of the period

  Number

  509,500

• Finance income for the period (implicit rate × outstanding net investment)

  Number

  35,665

• Lease payments received during the period

  Number

  115,220

• Closing net investment per the ledger

  Number

  429,945

• Operating lease: total lease payments over the term (rent-free periods and steps included)

  Number

• Operating lease: incentives granted to the lessee, deducted (0 if none)

  Number

• Operating lease: lease payments received in the period

  Number

• Operating lease: income recognised not yet received in the period

  Number

• Manufacturer or dealer: revenue (lower of fair value and present value at a market rate)

  NumberRequired

  To be entered only for a manufacturer or dealer lessor; an artificially low rate limits the profit to the one obtained at a market rate (paras. 71 and 73).

• Manufacturer or dealer: cost or carrying amount of the underlying asset

  NumberRequired

  Section to be completed only for a manufacturer or dealer lessor. These two inputs drive the cost of sales, the selling profit and the sale entry: for another lessor, they stay empty and these calculations are not produced, even when the unguaranteed residual value is entered; they then appear as not filled in a section that does not apply.

• Evidence obtained and referenced (category, document reference)

  EvidenceRequired

IFRS 16 §61IFRS 16 §62IFRS 16 §63IFRS 16 §64IFRS 16 §65IFRS 16 §66IFRS 16 §B53IFRS 16 §B54IFRS 16 §B55IFRS 16 §B56IFRS 16 §B57

• Situations and indicators of a finance lease

  ChecklistRequired

  • Transfer of ownership by the end of the lease term
  • Purchase option reasonably certain to be exercised at inception
  • Lease term for the major part of the economic life
  • Present value of the lease payments amounting to at least substantially all of the fair value
  • Specialised asset that only the lessee can use without major modifications
  • Cancellation losses, residual value fluctuations or secondary period at a reduced rent for the lessee
  • Indicators not conclusive: analysis of the transfer of substantially all the risks and rewards
  • Land and buildings classified separately (unless the land is immaterial)
  • Classification at the inception date, reassessed only on a modification

IFRS 16 §67IFRS 16 §68IFRS 16 §69IFRS 16 §70IFRS 16 §71IFRS 16 §72IFRS 16 §73IFRS 16 §74IFRS 16 §75IFRS 16 §76IFRS 16 §77IFRS 16 §78

• Rules applied to the finance lease

  Checklist

  • Receivable equal to the net investment, measured at the implicit rate
  • Initial direct costs included through the implicit rate
  • Payments included in the net investment
  • Manufacturer or dealer: selling profit at commencement, limited to a market rate
  • Manufacturer or dealer: costs of obtaining the lease expensed at commencement
  • Finance income at a constant periodic rate of return; payments applied against the gross investment
  • Impairment and derecognition under IFRS 9; unguaranteed residual values reviewed
  • Asset classified as held for sale: IFRS 5

IFRS 16 §81IFRS 16 §82IFRS 16 §83IFRS 16 §84IFRS 16 §85IFRS 16 §86

• Rules applied to the operating lease

  Checklist

  • Income on a straight-line basis or another more representative systematic basis
  • Costs incurred in earning the income, including depreciation, expensed
  • Initial direct costs added to the carrying amount of the asset and spread
  • Depreciation under IAS 16 or IAS 38 and impairment under IAS 36
  • No selling profit for a manufacturer or dealer

IFRS 16 §63IFRS 16 §68IFRS 16 §70IFRS 16 §71IFRS 16 §75IFRS 16 §81

• Present value of payment receivable no. 1

  CalculationRequired

  107,682.24

  Lease payment receivable no. 1 ; Interest rate implicit in the lease (periodic) ; Timing of payment no. 1 (number of periods from the commencement date)

  The ratio of the present value of the payments to fair value is an indicator (para. 63): the standard sets no numerical threshold for substantially all; any threshold used is a documented judgement of the entity.

• Present value of payment receivable no. 2

  Calculation

  100,637.61

  Lease payment receivable no. 2 ; Interest rate implicit in the lease (periodic) ; Timing of payment no. 2 (number of periods from the commencement date)

• Present value of payment receivable no. 3

  Calculation

  94,053.84

  Lease payment receivable no. 3 ; Interest rate implicit in the lease (periodic) ; Timing of payment no. 3 (number of periods from the commencement date)

• Present value of payment receivable no. 4

  Calculation

  87,900.79

  Lease payment receivable no. 4 ; Interest rate implicit in the lease (periodic) ; Timing of payment no. 4 (number of periods from the commencement date)

• Present value of payment receivable no. 5

  Calculation

  82,150.27

  Lease payment receivable no. 5 ; Interest rate implicit in the lease (periodic) ; Timing of payment no. 5 (number of periods from the commencement date)

• Present value of the unguaranteed residual value

  Calculation

  37,075.28

  Unguaranteed residual value accruing to the lessor ; Interest rate implicit in the lease (periodic) ; Timing of the residual value (number of periods from the commencement date)

• Discounted payments plus discounted unguaranteed residual value

  Calculation

  509,500.03

  Present value of the lease payments (sum of the values below) ; Present value of the unguaranteed residual value

• Manufacturer or dealer: net investment recognised (revenue and discounted residual value)

  CalculationRequired

  Manufacturer or dealer: revenue (lower of fair value and present value at a market rate) ; Present value of the unguaranteed residual value

  The engine adds the revenue retained and the discounted unguaranteed residual value: this is the net investment when the rate of the lease is a market rate (paras. 71 and 73).

• Manufacturer or dealer: cost of sales (cost less discounted residual value)

  Calculation

  Manufacturer or dealer: cost or carrying amount of the underlying asset ; − Present value of the unguaranteed residual value

• Manufacturer or dealer: selling profit

  CalculationRequired

  Manufacturer or dealer: revenue (lower of fair value and present value at a market rate) ; − Manufacturer or dealer: cost of sales (cost less discounted residual value)

• Closing net investment recalculated

  Calculation

  429,945

  Net investment at the beginning of the period ; Finance income for the period (implicit rate × outstanding net investment) ; − Lease payments received during the period ; Closing net investment per the ledger

• Difference with the ledger (0 expected)

  Calculation

  0

  Net investment at the beginning of the period ; Finance income for the period (implicit rate × outstanding net investment) ; − Lease payments received during the period ; Closing net investment per the ledger

• Annual straight-line operating lease income

  Calculation

  Operating lease: total lease payments over the term (rent-free periods and steps included) ; Operating lease: incentives granted to the lessee, deducted (0 if none) ; Lease term (in years)

• Lessor: initial recognition of the finance lease

  Entry

  Account	Debit	Credit
  Net investment in the lease	509,500
  Underlying asset derecognised		507,000
  Cash (initial direct costs)		2,500

  Assumption of this workpaper: for a lessor that is neither a manufacturer nor a dealer, the carrying amount of the asset derecognised equals its fair value, so that the net investment equals that value plus the initial direct costs. The entry family has no profit or loss line: if the carrying amount differs from fair value, the difference is not dealt with by this workpaper, the balance check flags it and the preparer analyses it separately.

• Manufacturer or dealer: sale and net investment

  Entry

  Debit Net investment in the lease ← Manufacturer or dealer: net investment recognised (revenue and discounted residual value) ; Credit Revenue ← Manufacturer or dealer: revenue (lower of fair value and present value at a market rate) ; Debit Cost of sales ← Manufacturer or dealer: cost of sales (cost less discounted residual value) ; Credit Inventories ← Manufacturer or dealer: cost or carrying amount of the underlying asset

• Finance income for the period

  Entry

  Account	Debit	Credit
  Net investment in the lease	35,665
  Finance income		35,665

• Receipt of the lease payments

  Entry

  Account	Debit	Credit
  Cash	115,220
  Net investment in the lease		115,220

• Operating lease income for the period

  Entry

  Debit Cash ← Operating lease: lease payments received in the period ; Debit Accrued lease income ← Operating lease: income recognised not yet received in the period ; Credit Operating lease income ← Annual straight-line operating lease income

IFRS 16 §62IFRS 16 §63IFRS 16 §64IFRS 16 §65

• Classification of the lease by the lessor

  JudgmentRequired

  Finance lease (substantially all the risks and rewards transferred)

  Finance lease (substantially all the risks and rewards transferred) / Operating lease

• Rationale: facts relied on, analysis, alternative rejected

  TextRequired

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

  TableRequired

IFRS 16 §67IFRS 16 §71IFRS 16 §75IFRS 16 §81

• Amounts documented for the note (Disclosure workpaper)

  Checklist

  • Net investment presented as a receivable
  • Selling profit of the manufacturer or dealer
  • Finance income for the period
  • Operating lease income for the period

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

  References

• The classification is documentedPass
• The present value of the payments equals the sum of the detailed valuesPass
• The net investment agrees with the discounted payments plus the discounted residual value (rate rounding accepted)Pass
• The initial entry is balancedPass
• The sale entry is balancedNot evaluated
• The finance income entry is balancedPass
• The receipt entry is balancedPass
• The operating lease entry is balancedNot evaluated

Assets

35,665

Liabilities

0

Profit or loss

35,665

OCI

0

Equity

35,665

• Lease analysed by the lessor (underlying asset, lessee, key clauses)

  TextRequired

• Inception date of the lease

  DateRequired

  20X1-01-01

• Fair value of the underlying asset at the inception date

  NumberRequired

  400,000

• Economic life of the underlying asset (in years)

  NumberRequired

  15 years

• Lease term (in years)

  NumberRequired

  4 years

• Lease payment receivable no. 1

  NumberRequired

  30,000

  Payments not received at the commencement date: fixed payments (including in substance) less incentives payable, variable payments that depend on an index or a rate, residual value guarantees received, the exercise price of a purchase option reasonably certain to be exercised, termination penalties (para. 70). Enter 0 for an unused row.

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

  NumberRequired

  1 units

• Lease payment receivable no. 2

  Number

  36,000

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

  Number

  2 units

• Lease payment receivable no. 3

  Number

  36,000

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

  Number

  3 units

• Lease payment receivable no. 4

  Number

  42,000

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

  Number

  4 units

• Lease payment receivable no. 5

  Number

  0

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

  Number

  0 units

• Interest rate implicit in the lease (periodic)

  NumberRequired

  5 %

• Present value of the lease payments (sum of the values below)

  NumberRequired

  126,876.14

• Unguaranteed residual value accruing to the lessor

  Number

• Timing of the residual value (number of periods from the commencement date)

  Number

• Finance lease: net investment in the lease (discounted payments and residual value)

  Number

  Finance lease only. The implicit rate is defined so that it includes the initial direct costs (para. 69): for a lessor that is neither a manufacturer nor a dealer, the net investment equals fair value plus those costs. When the rate provided is rounded, the sum of the present values may differ from it by a few cents: the check accepts a difference of up to 1.

• Lessor other than a manufacturer or dealer: carrying amount of the underlying asset derecognised

  Number

  To be entered only for a lessor that is neither a manufacturer nor a dealer: the datum drives the initial recognition entry of the finance lease.

• Lessor's initial direct costs (included in the net investment)

  Number

• Net investment at the beginning of the period

  Number

• Finance income for the period (implicit rate × outstanding net investment)

  Number

• Lease payments received during the period

  Number

• Closing net investment per the ledger

  Number

• Operating lease: total lease payments over the term (rent-free periods and steps included)

  Number

  144,000

• Operating lease: incentives granted to the lessee, deducted (0 if none)

  Number

  0

• Operating lease: lease payments received in the period

  Number

  30,000

• Operating lease: income recognised not yet received in the period

  Number

  6,000

• Manufacturer or dealer: revenue (lower of fair value and present value at a market rate)

  NumberRequired

  To be entered only for a manufacturer or dealer lessor; an artificially low rate limits the profit to the one obtained at a market rate (paras. 71 and 73).

• Manufacturer or dealer: cost or carrying amount of the underlying asset

  NumberRequired

  Section to be completed only for a manufacturer or dealer lessor. These two inputs drive the cost of sales, the selling profit and the sale entry: for another lessor, they stay empty and these calculations are not produced, even when the unguaranteed residual value is entered; they then appear as not filled in a section that does not apply.

• Evidence obtained and referenced (category, document reference)

  EvidenceRequired

IFRS 16 §61IFRS 16 §62IFRS 16 §63IFRS 16 §64IFRS 16 §65IFRS 16 §66IFRS 16 §B53IFRS 16 §B54IFRS 16 §B55IFRS 16 §B56IFRS 16 §B57

• Situations and indicators of a finance lease

  ChecklistRequired

  • Transfer of ownership by the end of the lease term
  • Purchase option reasonably certain to be exercised at inception
  • Lease term for the major part of the economic life
  • Present value of the lease payments amounting to at least substantially all of the fair value
  • Specialised asset that only the lessee can use without major modifications
  • Cancellation losses, residual value fluctuations or secondary period at a reduced rent for the lessee
  • Indicators not conclusive: analysis of the transfer of substantially all the risks and rewards
  • Land and buildings classified separately (unless the land is immaterial)
  • Classification at the inception date, reassessed only on a modification

IFRS 16 §67IFRS 16 §68IFRS 16 §69IFRS 16 §70IFRS 16 §71IFRS 16 §72IFRS 16 §73IFRS 16 §74IFRS 16 §75IFRS 16 §76IFRS 16 §77IFRS 16 §78

• Rules applied to the finance lease

  Checklist

  • Receivable equal to the net investment, measured at the implicit rate
  • Initial direct costs included through the implicit rate
  • Payments included in the net investment
  • Manufacturer or dealer: selling profit at commencement, limited to a market rate
  • Manufacturer or dealer: costs of obtaining the lease expensed at commencement
  • Finance income at a constant periodic rate of return; payments applied against the gross investment
  • Impairment and derecognition under IFRS 9; unguaranteed residual values reviewed
  • Asset classified as held for sale: IFRS 5

IFRS 16 §81IFRS 16 §82IFRS 16 §83IFRS 16 §84IFRS 16 §85IFRS 16 §86

• Rules applied to the operating lease

  Checklist

  • Income on a straight-line basis or another more representative systematic basis
  • Costs incurred in earning the income, including depreciation, expensed
  • Initial direct costs added to the carrying amount of the asset and spread
  • Depreciation under IAS 16 or IAS 38 and impairment under IAS 36
  • No selling profit for a manufacturer or dealer

IFRS 16 §63IFRS 16 §68IFRS 16 §70IFRS 16 §71IFRS 16 §75IFRS 16 §81

• Present value of payment receivable no. 1

  CalculationRequired

  28,571.43

  Lease payment receivable no. 1 ; Interest rate implicit in the lease (periodic) ; Timing of payment no. 1 (number of periods from the commencement date)

  The ratio of the present value of the payments to fair value is an indicator (para. 63): the standard sets no numerical threshold for substantially all; any threshold used is a documented judgement of the entity.

• Present value of payment receivable no. 2

  Calculation

  32,653.06

  Lease payment receivable no. 2 ; Interest rate implicit in the lease (periodic) ; Timing of payment no. 2 (number of periods from the commencement date)

• Present value of payment receivable no. 3

  Calculation

  31,098.15

  Lease payment receivable no. 3 ; Interest rate implicit in the lease (periodic) ; Timing of payment no. 3 (number of periods from the commencement date)

• Present value of payment receivable no. 4

  Calculation

  34,553.5

  Lease payment receivable no. 4 ; Interest rate implicit in the lease (periodic) ; Timing of payment no. 4 (number of periods from the commencement date)

• Present value of payment receivable no. 5

  Calculation

  0

  Lease payment receivable no. 5 ; Interest rate implicit in the lease (periodic) ; Timing of payment no. 5 (number of periods from the commencement date)

• Present value of the unguaranteed residual value

  Calculation

  Unguaranteed residual value accruing to the lessor ; Interest rate implicit in the lease (periodic) ; Timing of the residual value (number of periods from the commencement date)

• Discounted payments plus discounted unguaranteed residual value

  Calculation

  126,876.14

  Present value of the lease payments (sum of the values below) ; Present value of the unguaranteed residual value

• Manufacturer or dealer: net investment recognised (revenue and discounted residual value)

  CalculationRequired

  Manufacturer or dealer: revenue (lower of fair value and present value at a market rate) ; Present value of the unguaranteed residual value

  The engine adds the revenue retained and the discounted unguaranteed residual value: this is the net investment when the rate of the lease is a market rate (paras. 71 and 73).

• Manufacturer or dealer: cost of sales (cost less discounted residual value)

  Calculation

  Manufacturer or dealer: cost or carrying amount of the underlying asset ; − Present value of the unguaranteed residual value

• Manufacturer or dealer: selling profit

  CalculationRequired

  Manufacturer or dealer: revenue (lower of fair value and present value at a market rate) ; − Manufacturer or dealer: cost of sales (cost less discounted residual value)

• Closing net investment recalculated

  Calculation

  Net investment at the beginning of the period ; Finance income for the period (implicit rate × outstanding net investment) ; − Lease payments received during the period ; Closing net investment per the ledger

• Difference with the ledger (0 expected)

  Calculation

  Net investment at the beginning of the period ; Finance income for the period (implicit rate × outstanding net investment) ; − Lease payments received during the period ; Closing net investment per the ledger

• Annual straight-line operating lease income

  Calculation

  36,000

  Operating lease: total lease payments over the term (rent-free periods and steps included) ; Operating lease: incentives granted to the lessee, deducted (0 if none) ; Lease term (in years)

• Lessor: initial recognition of the finance lease

  Entry

  Debit Net investment in the lease ← Finance lease: net investment in the lease (discounted payments and residual value) ; Credit Underlying asset derecognised ← Lessor other than a manufacturer or dealer: carrying amount of the underlying asset derecognised ; Credit Cash (initial direct costs) ← Lessor's initial direct costs (included in the net investment)

  Assumption of this workpaper: for a lessor that is neither a manufacturer nor a dealer, the carrying amount of the asset derecognised equals its fair value, so that the net investment equals that value plus the initial direct costs. The entry family has no profit or loss line: if the carrying amount differs from fair value, the difference is not dealt with by this workpaper, the balance check flags it and the preparer analyses it separately.

• Manufacturer or dealer: sale and net investment

  Entry

  Debit Net investment in the lease ← Manufacturer or dealer: net investment recognised (revenue and discounted residual value) ; Credit Revenue ← Manufacturer or dealer: revenue (lower of fair value and present value at a market rate) ; Debit Cost of sales ← Manufacturer or dealer: cost of sales (cost less discounted residual value) ; Credit Inventories ← Manufacturer or dealer: cost or carrying amount of the underlying asset

• Finance income for the period

  Entry

  Debit Net investment in the lease ← Finance income for the period (implicit rate × outstanding net investment) ; Credit Finance income ← Finance income for the period (implicit rate × outstanding net investment)

• Receipt of the lease payments

  Entry

  Debit Cash ← Lease payments received during the period ; Credit Net investment in the lease ← Lease payments received during the period

• Operating lease income for the period

  Entry

  Account	Debit	Credit
  Cash	30,000
  Accrued lease income	6,000
  Operating lease income		36,000

IFRS 16 §62IFRS 16 §63IFRS 16 §64IFRS 16 §65

• Classification of the lease by the lessor

  JudgmentRequired

  Operating lease

  Finance lease (substantially all the risks and rewards transferred) / Operating lease

• Rationale: facts relied on, analysis, alternative rejected

  TextRequired

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

  TableRequired

IFRS 16 §67IFRS 16 §71IFRS 16 §75IFRS 16 §81

• Amounts documented for the note (Disclosure workpaper)

  Checklist

  • Net investment presented as a receivable
  • Selling profit of the manufacturer or dealer
  • Finance income for the period
  • Operating lease income for the period

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

  References

• The classification is documentedPass
• The present value of the payments equals the sum of the detailed valuesPass
• The net investment agrees with the discounted payments plus the discounted residual value (rate rounding accepted)Not evaluated
• The initial entry is balancedNot evaluated
• The sale entry is balancedNot evaluated
• The finance income entry is balancedNot evaluated
• The receipt entry is balancedNot evaluated
• The operating lease entry is balancedPass

Assets

36,000

Liabilities

0

Profit or loss

36,000

OCI

0

Equity

36,000

• Lease analysed by the lessor (underlying asset, lessee, key clauses)

  TextRequired

• Inception date of the lease

  DateRequired

  20X5-01-01

• Fair value of the underlying asset at the inception date

  NumberRequired

• Economic life of the underlying asset (in years)

  NumberRequired

• Lease term (in years)

  NumberRequired

  1 years

• Lease payment receivable no. 1

  NumberRequired

  Payments not received at the commencement date: fixed payments (including in substance) less incentives payable, variable payments that depend on an index or a rate, residual value guarantees received, the exercise price of a purchase option reasonably certain to be exercised, termination penalties (para. 70). Enter 0 for an unused row.

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

  NumberRequired

• Lease payment receivable no. 2

  Number

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

  Number

• Lease payment receivable no. 3

  Number

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

  Number

• Lease payment receivable no. 4

  Number

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

  Number

• Lease payment receivable no. 5

  Number

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

  Number

• Interest rate implicit in the lease (periodic)

  NumberRequired

• Present value of the lease payments (sum of the values below)

  NumberRequired

• Unguaranteed residual value accruing to the lessor

  Number

• Timing of the residual value (number of periods from the commencement date)

  Number

• Finance lease: net investment in the lease (discounted payments and residual value)

  Number

  Finance lease only. The implicit rate is defined so that it includes the initial direct costs (para. 69): for a lessor that is neither a manufacturer nor a dealer, the net investment equals fair value plus those costs. When the rate provided is rounded, the sum of the present values may differ from it by a few cents: the check accepts a difference of up to 1.

• Lessor other than a manufacturer or dealer: carrying amount of the underlying asset derecognised

  Number

  To be entered only for a lessor that is neither a manufacturer nor a dealer: the datum drives the initial recognition entry of the finance lease.

• Lessor's initial direct costs (included in the net investment)

  Number

• Net investment at the beginning of the period

  Number

• Finance income for the period (implicit rate × outstanding net investment)

  Number

• Lease payments received during the period

  Number

• Closing net investment per the ledger

  Number

• Operating lease: total lease payments over the term (rent-free periods and steps included)

  Number

  18,000

• Operating lease: incentives granted to the lessee, deducted (0 if none)

  Number

  0

• Operating lease: lease payments received in the period

  Number

  13,500

• Operating lease: income recognised not yet received in the period

  Number

  4,500

• Manufacturer or dealer: revenue (lower of fair value and present value at a market rate)

  NumberRequired

  To be entered only for a manufacturer or dealer lessor; an artificially low rate limits the profit to the one obtained at a market rate (paras. 71 and 73).

• Manufacturer or dealer: cost or carrying amount of the underlying asset

  NumberRequired

  Section to be completed only for a manufacturer or dealer lessor. These two inputs drive the cost of sales, the selling profit and the sale entry: for another lessor, they stay empty and these calculations are not produced, even when the unguaranteed residual value is entered; they then appear as not filled in a section that does not apply.

• Evidence obtained and referenced (category, document reference)

  EvidenceRequired

IFRS 16 §61IFRS 16 §62IFRS 16 §63IFRS 16 §64IFRS 16 §65IFRS 16 §66IFRS 16 §B53IFRS 16 §B54IFRS 16 §B55IFRS 16 §B56IFRS 16 §B57

• Situations and indicators of a finance lease

  ChecklistRequired

  • Transfer of ownership by the end of the lease term
  • Purchase option reasonably certain to be exercised at inception
  • Lease term for the major part of the economic life
  • Present value of the lease payments amounting to at least substantially all of the fair value
  • Specialised asset that only the lessee can use without major modifications
  • Cancellation losses, residual value fluctuations or secondary period at a reduced rent for the lessee
  • Indicators not conclusive: analysis of the transfer of substantially all the risks and rewards
  • Land and buildings classified separately (unless the land is immaterial)
  • Classification at the inception date, reassessed only on a modification

IFRS 16 §67IFRS 16 §68IFRS 16 §69IFRS 16 §70IFRS 16 §71IFRS 16 §72IFRS 16 §73IFRS 16 §74IFRS 16 §75IFRS 16 §76IFRS 16 §77IFRS 16 §78

• Rules applied to the finance lease

  Checklist

  • Receivable equal to the net investment, measured at the implicit rate
  • Initial direct costs included through the implicit rate
  • Payments included in the net investment
  • Manufacturer or dealer: selling profit at commencement, limited to a market rate
  • Manufacturer or dealer: costs of obtaining the lease expensed at commencement
  • Finance income at a constant periodic rate of return; payments applied against the gross investment
  • Impairment and derecognition under IFRS 9; unguaranteed residual values reviewed
  • Asset classified as held for sale: IFRS 5

IFRS 16 §81IFRS 16 §82IFRS 16 §83IFRS 16 §84IFRS 16 §85IFRS 16 §86

• Rules applied to the operating lease

  Checklist

  • Income on a straight-line basis or another more representative systematic basis
  • Costs incurred in earning the income, including depreciation, expensed
  • Initial direct costs added to the carrying amount of the asset and spread
  • Depreciation under IAS 16 or IAS 38 and impairment under IAS 36
  • No selling profit for a manufacturer or dealer

IFRS 16 §63IFRS 16 §68IFRS 16 §70IFRS 16 §71IFRS 16 §75IFRS 16 §81

• Present value of payment receivable no. 1

  CalculationRequired

  Lease payment receivable no. 1 ; Interest rate implicit in the lease (periodic) ; Timing of payment no. 1 (number of periods from the commencement date)

  The ratio of the present value of the payments to fair value is an indicator (para. 63): the standard sets no numerical threshold for substantially all; any threshold used is a documented judgement of the entity.

• Present value of payment receivable no. 2

  Calculation

  Lease payment receivable no. 2 ; Interest rate implicit in the lease (periodic) ; Timing of payment no. 2 (number of periods from the commencement date)

• Present value of payment receivable no. 3

  Calculation

  Lease payment receivable no. 3 ; Interest rate implicit in the lease (periodic) ; Timing of payment no. 3 (number of periods from the commencement date)

• Present value of payment receivable no. 4

  Calculation

  Lease payment receivable no. 4 ; Interest rate implicit in the lease (periodic) ; Timing of payment no. 4 (number of periods from the commencement date)

• Present value of payment receivable no. 5

  Calculation

  Lease payment receivable no. 5 ; Interest rate implicit in the lease (periodic) ; Timing of payment no. 5 (number of periods from the commencement date)

• Present value of the unguaranteed residual value

  Calculation

  Unguaranteed residual value accruing to the lessor ; Interest rate implicit in the lease (periodic) ; Timing of the residual value (number of periods from the commencement date)

• Discounted payments plus discounted unguaranteed residual value

  Calculation

  Present value of the lease payments (sum of the values below) ; Present value of the unguaranteed residual value

• Manufacturer or dealer: net investment recognised (revenue and discounted residual value)

  CalculationRequired

  Manufacturer or dealer: revenue (lower of fair value and present value at a market rate) ; Present value of the unguaranteed residual value

  The engine adds the revenue retained and the discounted unguaranteed residual value: this is the net investment when the rate of the lease is a market rate (paras. 71 and 73).

• Manufacturer or dealer: cost of sales (cost less discounted residual value)

  Calculation

  Manufacturer or dealer: cost or carrying amount of the underlying asset ; − Present value of the unguaranteed residual value

• Manufacturer or dealer: selling profit

  CalculationRequired

  Manufacturer or dealer: revenue (lower of fair value and present value at a market rate) ; − Manufacturer or dealer: cost of sales (cost less discounted residual value)

• Closing net investment recalculated

  Calculation

  Net investment at the beginning of the period ; Finance income for the period (implicit rate × outstanding net investment) ; − Lease payments received during the period ; Closing net investment per the ledger

• Difference with the ledger (0 expected)

  Calculation

  Net investment at the beginning of the period ; Finance income for the period (implicit rate × outstanding net investment) ; − Lease payments received during the period ; Closing net investment per the ledger

• Annual straight-line operating lease income

  Calculation

  18,000

  Operating lease: total lease payments over the term (rent-free periods and steps included) ; Operating lease: incentives granted to the lessee, deducted (0 if none) ; Lease term (in years)

• Lessor: initial recognition of the finance lease

  Entry

  Debit Net investment in the lease ← Finance lease: net investment in the lease (discounted payments and residual value) ; Credit Underlying asset derecognised ← Lessor other than a manufacturer or dealer: carrying amount of the underlying asset derecognised ; Credit Cash (initial direct costs) ← Lessor's initial direct costs (included in the net investment)

  Assumption of this workpaper: for a lessor that is neither a manufacturer nor a dealer, the carrying amount of the asset derecognised equals its fair value, so that the net investment equals that value plus the initial direct costs. The entry family has no profit or loss line: if the carrying amount differs from fair value, the difference is not dealt with by this workpaper, the balance check flags it and the preparer analyses it separately.

• Manufacturer or dealer: sale and net investment

  Entry

  Debit Net investment in the lease ← Manufacturer or dealer: net investment recognised (revenue and discounted residual value) ; Credit Revenue ← Manufacturer or dealer: revenue (lower of fair value and present value at a market rate) ; Debit Cost of sales ← Manufacturer or dealer: cost of sales (cost less discounted residual value) ; Credit Inventories ← Manufacturer or dealer: cost or carrying amount of the underlying asset

• Finance income for the period

  Entry

  Debit Net investment in the lease ← Finance income for the period (implicit rate × outstanding net investment) ; Credit Finance income ← Finance income for the period (implicit rate × outstanding net investment)

• Receipt of the lease payments

  Entry

  Debit Cash ← Lease payments received during the period ; Credit Net investment in the lease ← Lease payments received during the period

• Operating lease income for the period

  Entry

  Account	Debit	Credit
  Cash	13,500
  Accrued lease income	4,500
  Operating lease income		18,000

IFRS 16 §62IFRS 16 §63IFRS 16 §64IFRS 16 §65

• Classification of the lease by the lessor

  JudgmentRequired

  Operating lease

  Finance lease (substantially all the risks and rewards transferred) / Operating lease

• Rationale: facts relied on, analysis, alternative rejected

  TextRequired

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

  TableRequired

IFRS 16 §67IFRS 16 §71IFRS 16 §75IFRS 16 §81

• Amounts documented for the note (Disclosure workpaper)

  Checklist

  • Net investment presented as a receivable
  • Selling profit of the manufacturer or dealer
  • Finance income for the period
  • Operating lease income for the period

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

  References

• The classification is documentedPass
• The present value of the payments equals the sum of the detailed valuesNot evaluated
• The net investment agrees with the discounted payments plus the discounted residual value (rate rounding accepted)Not evaluated
• The initial entry is balancedNot evaluated
• The sale entry is balancedNot evaluated
• The finance income entry is balancedNot evaluated
• The receipt entry is balancedNot evaluated
• The operating lease entry is balancedPass

Assets

18,000

Liabilities

0

Profit or loss

18,000

OCI

0

Equity

18,000

• Lease analysed by the lessor (underlying asset, lessee, key clauses)

  TextRequired

• Inception date of the lease

  DateRequired

  20X5-12-01

• Fair value of the underlying asset at the inception date

  NumberRequired

• Economic life of the underlying asset (in years)

  NumberRequired

  3 years

• Lease term (in years)

  NumberRequired

  3 years

• Lease payment receivable no. 1

  NumberRequired

  Payments not received at the commencement date: fixed payments (including in substance) less incentives payable, variable payments that depend on an index or a rate, residual value guarantees received, the exercise price of a purchase option reasonably certain to be exercised, termination penalties (para. 70). Enter 0 for an unused row.

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

  NumberRequired

• Lease payment receivable no. 2

  Number

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

  Number

• Lease payment receivable no. 3

  Number

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

  Number

• Lease payment receivable no. 4

  Number

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

  Number

• Lease payment receivable no. 5

  Number

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

  Number

• Interest rate implicit in the lease (periodic)

  NumberRequired

• Present value of the lease payments (sum of the values below)

  NumberRequired

• Unguaranteed residual value accruing to the lessor

  Number

• Timing of the residual value (number of periods from the commencement date)

  Number

• Finance lease: net investment in the lease (discounted payments and residual value)

  Number

  Finance lease only. The implicit rate is defined so that it includes the initial direct costs (para. 69): for a lessor that is neither a manufacturer nor a dealer, the net investment equals fair value plus those costs. When the rate provided is rounded, the sum of the present values may differ from it by a few cents: the check accepts a difference of up to 1.

• Lessor other than a manufacturer or dealer: carrying amount of the underlying asset derecognised

  Number

  To be entered only for a lessor that is neither a manufacturer nor a dealer: the datum drives the initial recognition entry of the finance lease.

• Lessor's initial direct costs (included in the net investment)

  Number

• Net investment at the beginning of the period

  Number

• Finance income for the period (implicit rate × outstanding net investment)

  Number

• Lease payments received during the period

  Number

• Closing net investment per the ledger

  Number

• Operating lease: total lease payments over the term (rent-free periods and steps included)

  Number

• Operating lease: incentives granted to the lessee, deducted (0 if none)

  Number

• Operating lease: lease payments received in the period

  Number

• Operating lease: income recognised not yet received in the period

  Number

• Manufacturer or dealer: revenue (lower of fair value and present value at a market rate)

  NumberRequired

  To be entered only for a manufacturer or dealer lessor; an artificially low rate limits the profit to the one obtained at a market rate (paras. 71 and 73).

• Manufacturer or dealer: cost or carrying amount of the underlying asset

  NumberRequired

  Section to be completed only for a manufacturer or dealer lessor. These two inputs drive the cost of sales, the selling profit and the sale entry: for another lessor, they stay empty and these calculations are not produced, even when the unguaranteed residual value is entered; they then appear as not filled in a section that does not apply.

• Evidence obtained and referenced (category, document reference)

  EvidenceRequired

IFRS 16 §61IFRS 16 §62IFRS 16 §63IFRS 16 §64IFRS 16 §65IFRS 16 §66IFRS 16 §B53IFRS 16 §B54IFRS 16 §B55IFRS 16 §B56IFRS 16 §B57

• Situations and indicators of a finance lease

  ChecklistRequired

  • Transfer of ownership by the end of the lease term
  • Purchase option reasonably certain to be exercised at inception
  • Lease term for the major part of the economic life
  • Present value of the lease payments amounting to at least substantially all of the fair value
  • Specialised asset that only the lessee can use without major modifications
  • Cancellation losses, residual value fluctuations or secondary period at a reduced rent for the lessee
  • Indicators not conclusive: analysis of the transfer of substantially all the risks and rewards
  • Land and buildings classified separately (unless the land is immaterial)
  • Classification at the inception date, reassessed only on a modification

IFRS 16 §67IFRS 16 §68IFRS 16 §69IFRS 16 §70IFRS 16 §71IFRS 16 §72IFRS 16 §73IFRS 16 §74IFRS 16 §75IFRS 16 §76IFRS 16 §77IFRS 16 §78

• Rules applied to the finance lease

  Checklist

  • Receivable equal to the net investment, measured at the implicit rate
  • Initial direct costs included through the implicit rate
  • Payments included in the net investment
  • Manufacturer or dealer: selling profit at commencement, limited to a market rate
  • Manufacturer or dealer: costs of obtaining the lease expensed at commencement
  • Finance income at a constant periodic rate of return; payments applied against the gross investment
  • Impairment and derecognition under IFRS 9; unguaranteed residual values reviewed
  • Asset classified as held for sale: IFRS 5

IFRS 16 §81IFRS 16 §82IFRS 16 §83IFRS 16 §84IFRS 16 §85IFRS 16 §86

• Rules applied to the operating lease

  Checklist

  • Income on a straight-line basis or another more representative systematic basis
  • Costs incurred in earning the income, including depreciation, expensed
  • Initial direct costs added to the carrying amount of the asset and spread
  • Depreciation under IAS 16 or IAS 38 and impairment under IAS 36
  • No selling profit for a manufacturer or dealer

IFRS 16 §63IFRS 16 §68IFRS 16 §70IFRS 16 §71IFRS 16 §75IFRS 16 §81

• Present value of payment receivable no. 1

  CalculationRequired

  Lease payment receivable no. 1 ; Interest rate implicit in the lease (periodic) ; Timing of payment no. 1 (number of periods from the commencement date)

  The ratio of the present value of the payments to fair value is an indicator (para. 63): the standard sets no numerical threshold for substantially all; any threshold used is a documented judgement of the entity.

• Present value of payment receivable no. 2

  Calculation

  Lease payment receivable no. 2 ; Interest rate implicit in the lease (periodic) ; Timing of payment no. 2 (number of periods from the commencement date)

• Present value of payment receivable no. 3

  Calculation

  Lease payment receivable no. 3 ; Interest rate implicit in the lease (periodic) ; Timing of payment no. 3 (number of periods from the commencement date)

• Present value of payment receivable no. 4

  Calculation

  Lease payment receivable no. 4 ; Interest rate implicit in the lease (periodic) ; Timing of payment no. 4 (number of periods from the commencement date)

• Present value of payment receivable no. 5

  Calculation

  Lease payment receivable no. 5 ; Interest rate implicit in the lease (periodic) ; Timing of payment no. 5 (number of periods from the commencement date)

• Present value of the unguaranteed residual value

  Calculation

  Unguaranteed residual value accruing to the lessor ; Interest rate implicit in the lease (periodic) ; Timing of the residual value (number of periods from the commencement date)

• Discounted payments plus discounted unguaranteed residual value

  Calculation

  Present value of the lease payments (sum of the values below) ; Present value of the unguaranteed residual value

• Manufacturer or dealer: net investment recognised (revenue and discounted residual value)

  CalculationRequired

  Manufacturer or dealer: revenue (lower of fair value and present value at a market rate) ; Present value of the unguaranteed residual value

  The engine adds the revenue retained and the discounted unguaranteed residual value: this is the net investment when the rate of the lease is a market rate (paras. 71 and 73).

• Manufacturer or dealer: cost of sales (cost less discounted residual value)

  Calculation

  Manufacturer or dealer: cost or carrying amount of the underlying asset ; − Present value of the unguaranteed residual value

• Manufacturer or dealer: selling profit

  CalculationRequired

  Manufacturer or dealer: revenue (lower of fair value and present value at a market rate) ; − Manufacturer or dealer: cost of sales (cost less discounted residual value)

• Closing net investment recalculated

  Calculation

  Net investment at the beginning of the period ; Finance income for the period (implicit rate × outstanding net investment) ; − Lease payments received during the period ; Closing net investment per the ledger

• Difference with the ledger (0 expected)

  Calculation

  Net investment at the beginning of the period ; Finance income for the period (implicit rate × outstanding net investment) ; − Lease payments received during the period ; Closing net investment per the ledger

• Annual straight-line operating lease income

  Calculation

  Operating lease: total lease payments over the term (rent-free periods and steps included) ; Operating lease: incentives granted to the lessee, deducted (0 if none) ; Lease term (in years)

• Lessor: initial recognition of the finance lease

  Entry

  Debit Net investment in the lease ← Finance lease: net investment in the lease (discounted payments and residual value) ; Credit Underlying asset derecognised ← Lessor other than a manufacturer or dealer: carrying amount of the underlying asset derecognised ; Credit Cash (initial direct costs) ← Lessor's initial direct costs (included in the net investment)

  Assumption of this workpaper: for a lessor that is neither a manufacturer nor a dealer, the carrying amount of the asset derecognised equals its fair value, so that the net investment equals that value plus the initial direct costs. The entry family has no profit or loss line: if the carrying amount differs from fair value, the difference is not dealt with by this workpaper, the balance check flags it and the preparer analyses it separately.

• Manufacturer or dealer: sale and net investment

  Entry

  Debit Net investment in the lease ← Manufacturer or dealer: net investment recognised (revenue and discounted residual value) ; Credit Revenue ← Manufacturer or dealer: revenue (lower of fair value and present value at a market rate) ; Debit Cost of sales ← Manufacturer or dealer: cost of sales (cost less discounted residual value) ; Credit Inventories ← Manufacturer or dealer: cost or carrying amount of the underlying asset

• Finance income for the period

  Entry

  Debit Net investment in the lease ← Finance income for the period (implicit rate × outstanding net investment) ; Credit Finance income ← Finance income for the period (implicit rate × outstanding net investment)

• Receipt of the lease payments

  Entry

  Debit Cash ← Lease payments received during the period ; Credit Net investment in the lease ← Lease payments received during the period

• Operating lease income for the period

  Entry

  Debit Cash ← Operating lease: lease payments received in the period ; Debit Accrued lease income ← Operating lease: income recognised not yet received in the period ; Credit Operating lease income ← Annual straight-line operating lease income

IFRS 16 §62IFRS 16 §63IFRS 16 §64IFRS 16 §65

• Classification of the lease by the lessor

  JudgmentRequired

  Finance lease (substantially all the risks and rewards transferred)

  Finance lease (substantially all the risks and rewards transferred) / Operating lease

• Rationale: facts relied on, analysis, alternative rejected

  TextRequired

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

  TableRequired

IFRS 16 §67IFRS 16 §71IFRS 16 §75IFRS 16 §81

• Amounts documented for the note (Disclosure workpaper)

  Checklist

  • Net investment presented as a receivable
  • Selling profit of the manufacturer or dealer
  • Finance income for the period
  • Operating lease income for the period

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

  References

• The classification is documentedPass
• The present value of the payments equals the sum of the detailed valuesNot evaluated
• The net investment agrees with the discounted payments plus the discounted residual value (rate rounding accepted)Not evaluated
• The initial entry is balancedNot evaluated
• The sale entry is balancedNot evaluated
• The finance income entry is balancedNot evaluated
• The receipt entry is balancedNot evaluated
• The operating lease entry is balancedNot evaluated

Assets

0

Liabilities

0

Profit or loss

0

OCI

0

Equity

0