Leases, Provisions, and Employee Benefits Flashcards

Under IFRS 16, how does a lessee recognise most leases on its balance sheet at commencement?

Answer: As a right-of-use asset and a corresponding lease liability

IFRS 16 requires lessees to recognise a right-of-use asset and lease liability for virtually all leases.

Which of the following is an exemption under IFRS 16 that allows a lessee to expense lease payments straight-line?

Answer: Short-term leases (12 months or less) and low-value asset leases

IFRS 16 permits the short-term and low-value exemptions which allow straight-line lease expense treatment.

Under IAS 37, a provision should be recognised when:

Answer: There is a present obligation, it is probable an outflow will be required, and the amount can be reliably estimated

All three criteria—present obligation, probable outflow, and reliable estimate—must be met for a provision.

Under IAS 37, a contingent liability is:

Answer: Disclosed in the notes but not recognised in the financial statements

A contingent liability is disclosed rather than recognised because the outflow is possible but not probable.

Under IAS 19, a defined benefit obligation is measured using:

Answer: The projected unit credit method

IAS 19 requires the projected unit credit actuarial method to measure defined benefit obligations.

Under IAS 19, actuarial gains and losses on defined benefit plans are recognised in:

Answer: Other comprehensive income (OCI)

IAS 19 requires immediate recognition of actuarial gains and losses in OCI with no recycling to profit or loss.