In order to understand how the discount rate impacts the company’s pension obligations, it is useful to first understand the finance concepts of time value of money and present value. Note that the discount rate is the most important (and most difficult to assess) assumption in calculating pension obligations.
The concept of time value of money is best explained in a simple way: a dollar today is worth more than a dollar in the future.
Imagine … Continue reading
The liability will be the present value of the lease payments not paid on the date the contract starts over the lease term. This will be calculated using the interest rate implicit in the lease or, if that is not known, the lessee’s incremental borrowing rate.
Lease payments… Continue reading
The first part of calculations and background information for the simple case IFRS 16 Leases is dicsussed on the web page listed here.
Simple case IFRS 16 Leases – Fixed payments depending on an index and rent free period
We will not repeat every quarterly payment/journal entry. However the quarterly payment as at 1 December 2015, the year-end financial closing entries and the indexing as at 1 March 2016 will be discussed here.
Qtr payment 1 December 2015:… Continue reading
This case is rather simple, fixed payments depending on an index and rent free period. Here are only included the journal entries to be made at the inception of the lease contract.
This contract comprises a
The lease contract has a lease term… Continue reading