IAS 36 How Impairment test

IAS 36 How Impairment test is all about this – When looking at the step-by-step IAS 36 impairment approach it comes down to the following broadly organised steps: IAS 36 How Impairment test

  • What?? – Determining the scope and structure of the impairment review, explained here,
  • If and when? – Determining if and when a quantitative impairment test is necessary, explained here,
  • IAS 36 How Impairment test or understanding the mechanics of the impairment test and how to recognise or reverse any impairment loss, if necessary. Which is explained in this section…

The objective of IAS 36 Impairment of assets is to outline the procedures that an entity applies to ensure that its assets’ carrying values are not … Read more


Lease - a contract, or part of a contract, that conveys the right to use an asset (the underlying asset) for a period of time in exchange for consideration.

Financing activities

Financing activities - Activities that result in changes in the size and composition of the contributed capital and borrowings of the entity.

IFRS 16 Modification short-term lease

IFRS 16 Modification short-term lease – The life of a short-term lease

The lease term

It all starts with determining the lease term on the commencement date of the lease. A short-term lease must have a lease term of 12 months or less determined on the commencement date. Furthermore, it must not contain any purchase options – if it does, it automatically fails the short-term lease definition.

The lease term comprises the non-cancellable period of a lease together with periods covered by an option to extend (terminate) the lease if the lessee is reasonably certain (not) to exercise that option. The relationship between the non-cancellable period, lease term, and enforceable period of a lease can be illustrated as follows:


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Case IFRS 16 Lease car contract

Case IFRS 16 Lease car contract Case IFRS 16 Lease car contract – Because this is a quite frequently used type of lease it is good to get an understanding of how to apply IFRS 16 on a car lease. This includes all the detailed calculations in spreadsheet examples (including Excel functions used) needed to record the correct entries.

The case:

Contract commencement date: 27/02/2017
Lease term: 48 months
The lessor’s investment in the car is EUR 20,872.33
The residual value of the car is EUR 12,112.00
The monthly lease payment is EUR 231.08 payable at month-end

The lease payment includes the payment of interest and principal and is an operating lease that includes car related taxes, maintenance and repairs, car insurance, administration and management fees. … Read more

Leasehold makegood and restoration provisions

Leasehold makegood and restoration provisions – Lease makegood / leasehold restoration provisions should be recognised in relation to properties held under operating leases. Such a provision may arise because many property leases contain clauses under which the lessee has to make good dilapidations or other damage which occurs to the property during the course of the lease or restore a property to a specified condition.

Overview Leasehold makegood and restoration provisions leased office

Under IAS 37 14, a provision shall be recognised when: Leasehold makegood and restoration provisions leased office

  • “An entity has a present obligation (legal or constructive) as a result of a past event;
  • It is probable that an outflow of resources embodying economic benefits will be
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