Recognition exemptions

Recognition exemptions (paragraphs B3–B8)

Recognition exemptions (paragraphs B3–B8)

5

A lessee may elect not to apply the requirements in paragraphs 22–49 to:

(a) short-term leases; and

(b) leases for which the underlying asset is of low value (as described in paragraphs B3–B8).

6

If a lessee elects not to apply the requirements in paragraphs 22–49 to either short-term leases or leases for which the underlying asset is of low value, the lessee shall recognise the lease payments associated with those leases as an expense on either a straight-line basis over the lease term or another systematic basis. The lessee shall apply another systematic basis if that basis is more representative of the pattern of the lessee’s benefit.

7

If a lessee accounts for short-term leases applying paragraph 6, the lessee shall consider the lease to be a new lease for the purposes of this Standard if:

(a)            there is a lease modification; or

(b)            there is any change in the lease term (for example, the lessee exercises an option not previously included in its determination of the lease term).

8

The election for short-term leases shall be made by class of underlying asset to which the right of use relates. A class of underlying asset is a grouping of underlying assets of a similar nature and use in an entity’s operations. The election for leases for which the underlying asset is of low value can be made on a lease-by-lease basis.