Objective

This Standard sets out the principles for the recognition, measurement, presentation and disclosure of leases. The objective is to ensure that lessees and lessors provide relevant information in a manner that faithfully represents those transactions. This information gives a basis for users of financial statements to assess the effect that leases have on the financial position, financial performance and cash flows of an entity.

Scope

An entity shall apply this Standard to all leases, including leases of right-of-use assets in a sublease, except for:

• leases to explore for or use minerals, oil, natural gas and similar nonregenerative resources;
• leases of biological assets within the scope of IAS 41 Agriculture held by a lessee;
• service concession arrangements within the scope of IFRIC 12 Service Concession Arrangements;
• licences of intellectual property granted by a lessor within the scope of IFRS 15 Revenue from Contracts with Customers; and
• rights held by a lessee under licensing agreements within the scope of IAS 38 Intangible Assets for such items as motion picture films, video recordings, plays, manuscripts, patents and copyrights

Recognition

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

• short-term leases; and
• leases for which the underlying asset is of low value (as described in paragraphs B3–B8).

At the commencement date, a lessee shall recognise a right-of-use asset and a lease liability.

Measurement

At the commencement date, a lessee shall measure the right-of-use asset at cost.

Defined terms

commencement date of the lease (commencement date) The date on which a lessor makes an underlying asset available for use by a lessee.

economic life Either the period over which an asset is expected to be economically usable by one or more users or the number of production or similar units expected to be obtained from an asset by one or more users.

effective date of the modification The date when both parties agree to a lease modification

fair value For the purpose of applying the lessor accounting requirements in this Standard, the amount for which an asset could be exchanged, or a liability settled, between knowledgeable, willing parties in an arm’s length transaction

finance lease A lease that transfers substantially all the risks and rewards incidental to ownership of an underlying asset.

fixed payments Payments made by a lessee to a lessor for the right to use an underlying asset during the lease term, excluding variable lease payments.

gross investment in the lease The sum of: (a) the lease payments receivable by a lessor under a finance lease; and (b) any unguaranteed residual value accruing to the lessor

inception date of the lease (inception date) The earlier of the date of a lease agreement and the date of commitment by the parties to the principal terms and conditions of the lease.

initial direct costs Incremental costs of obtaining a lease that would not have been incurred if the lease had not been obtained, except for such costs incurred by a manufacturer or dealer lessor in connection with a finance lease.

interest rate implicit in the lease The rate of interest that causes the present value of

1. the lease payments and
2. the unguaranteed residual value to equal the sum of

• the fair value of the underlying asset and
• any initial direct costs of the lessor.

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.

lease incentives Payments made by a lessor to a lessee associated with a lease, or the reimbursement or assumption by a lessor of costs of a lessee.

lease modification A change in the scope of a lease, or the consideration for a lease, that was not part of the original terms and conditions of the lease (for example, adding or terminating the right to use one or more underlying assets, or extending or shortening the contractual lease term).

lease payments Payments made by a lessee to a lessor relating to the right to use an underlying asset during the lease term, comprising the following:

• fixed payments (including in-substance fixed payments ), less any lease incentives;
• variable lease payments that depend on an index or a rate;
• the exercise price of a purchase option if the lessee is reasonably certain to exercise that option; and
• payments of penalties for terminating the lease, if the lease term reflects the lessee exercising an option to terminate the lease.

For the lessee, lease payments also include amounts expected to be payable by the lessee under residual value guarantees. Lease payments do not include payments allocated to non-lease components of a contract, unless the lessee elects to combine non-lease components with a lease component and to account for them as a single lease component.

For the lessee, lease payments also include amounts expected to be payable by the lessee under residual value guarantees. Lease payments do not include payments allocated to non-lease components of a contract, unless the lessee elects to combine non-lease components with a lease component and to account for them as a single lease component.

lease term The non-cancellable period for which a lessee has the right to use an underlying asset, together with both: (a) periods covered by an option to extend the lease if the lessee is reasonably certain to exercise that option; and (b) periods covered by an option to terminate the lease if the lessee is reasonably certain not to exercise that option.

lessee An entity that obtains the right to use an underlying asset for a period of time in exchange for consideration.

lessee’s incremental borrowing rate The rate of interest that a lessee would have to pay to borrow over a similar term, and with a similar security, the funds necessary to obtain an asset of a similar value to the right-ofuse asset in a similar economic environment.

lessor An entity that provides the right to use an underlying asset for a period of time in exchange for consideration.

net investment in the lease The gross investment in the lease discounted at the interest rate implicit in the lease.

operating lease A lease that does not transfer substantially all the risks and rewards incidental to ownership of an underlying asset.

optional lease payments Payments to be made by a lessee to a lessor for the right to use an underlying asset during periods covered by an option to extend or terminate a lease that are not included in the lease term.

period of use The total period of time that an asset is used to fulfil a contract with a customer (including any non-consecutive periods of time).

residual value guarantee A guarantee made to a lessor by a party unrelated to the lessor that the value (or part of the value) of an underlying asset at the end of a lease will be at least a specified amount.

right-of-use asset An asset that represents a lessee’s right to use an underlying asset for the lease term.

short-term lease A lease that, at the commencement date, has a lease term of 12 months or less. A lease that contains a purchase option is not a short-term lease.

sublease A transaction for which an underlying asset is re-leased by a lessee (‘intermediate lessor’) to a third party, and the lease (‘head lease’) between the head lessor and lessee remains in effect.

underlying asset An asset that is the subject of a lease, for which the right to use that asset has been provided by a lessor to a lessee.

unearned finance income The difference between:

• the gross investment in the lease; and
• the net investment in the lease.

unguaranteed residual value That portion of the residual value of the underlying asset, the realisation of which by a lessor is not assured or is guaranteed solely by a party related to the lessor.

variable lease payments The portion of payments made by a lessee to a lessor for the right to use an underlying asset during the lease term that varies because of changes in facts or circumstances occurring after the commencement date, other than the passage of time.

Disclosure

The objective of the disclosures is for lessors to disclose information in the notes that, together with the information provided in the statement of financial position, statement of profit or loss and statement of cash flows, gives a basis for users of financial statements to assess the effect that leases have on the financial position, financial performance and cash flows of the lessor. Paragraphs 90–97 specify requirements on how to meet this objective.

A lessor shall disclose the following amounts for the reporting period:

1. for finance leases:

• selling profit or loss;
• finance income on the net investment in the lease; and
• income relating to variable lease payments not included in the measurement of the net investment in the lease.

2. for operating leases, lease income, separately disclosing income relating to variable lease payments that do not depend on an index or a rate.

Objective

The objective of this Standard is to establish the principles that an entity shall apply to report useful information to users of financial statements about the nature, amount, timing and uncertainty of revenue and cash flows arising from a contract with a customer.

Scope

An entity shall apply this Standard to all contracts with customers, except the following:

• lease contracts within the scope of IFRS 16 Leases;
• contracts within the scope of IFRS 17 Insurance Contracts. However, an entity may choose to apply this Standard to insurance contracts that have as their primary purpose the provision of services for a fixed fee in accordance with paragraph 8 of IFRS 17;
• financial instruments and other contractual rights or obligations within the scope of IFRS 9 Financial Instruments, IFRS 10 Consolidated Financial Statements, IFRS 11 Joint Arrangements, IAS 27 Separate Financial Statements and IAS 28 Investments in Associates and Joint Ventures; and
• non-monetary exchanges between entities in the same line of business to facilitate sales to customers or potential customers. For example, this Standard would not apply to a contract between two oil companies that agree to an exchange of oil to fulfil demand from their customers in different specified locations on a timely basis

Recognition

An entity shall account for a contract with a customer that is within the scope of this Standard only when all of the following criteria are met:

• the parties to the contract have approved the contract (in writing, orally or in accordance with other customary business practices) and are committed to perform their respective obligations;
• the entity can identify each party’s rights regarding the goods or services to be transferred;
• the entity can identify the payment terms for the goods or services to be transferred;
• the contract has commercial substance (ie the risk, timing or amount of the entity’s future cash flows is expected to change as a result of the contract); and
• it is probable that the entity will collect the consideration to which it will be entitled in exchange for the goods or services that will be transferred to the customer. In evaluating whether collectability of an amount of consideration is probable, an entity shall consider only the customer’s ability and intention to pay that amount of consideration when it is due. The amount of consideration to which the entity will be entitled may be less than the price stated in the contract if the consideration is variable because the entity may offer the customer a price concession (see paragraph 52).

Measurement

When (or as) a performance obligation is satisfied, an entity shall recognise as revenue the amount of the transaction price (which excludes estimates of variable consideration that are constrained in accordance with paragraphs 56–58) that is allocated to that performance obligation

Defined terms

contract An agreement between two or more parties that creates enforceable rights and obligations.

contract asset An entity’s right to consideration in exchange for goods or services that the entity has transferred to a customer when that right is conditioned on something other than the passage of time (for example, the entity’s future performance).

contract liability An entity’s obligation to transfer goods or services to a customer for which the entity has received consideration (or the amount is due) from the customer.

customer A party that has contracted with an entity to obtain goods or services that are an output of the entity’s ordinary activities in exchange for consideration.

income Increases in economic benefits during the accounting period in the form of inflows or enhancements of assets or decreases of liabilities that result in an increase in equity, other than those relating to contributions from equity participants.

performance obligation A promise in a contract with a customer to transfer to the customer either:

• a good or service (or a bundle of goods or services) that is distinct; or
• a series of distinct goods or services that are substantially the same and that have the same pattern of transfer to the customer.

revenue Income arising in the course of an entity’s ordinary activities.

stand-alone selling price (of a good or service) The price at which an entity would sell a promised good or service separately to a customer.

transaction price (for a contract with a customer) The amount of consideration to which an entity expects to be entitled in exchange for transferring promised goods or services to a customer, excluding amounts collected on behalf of third parties.

Disclosure

The objective of the disclosure requirements is for an entity to disclose sufficient information to enable users of financial statements to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. To achieve that objective, an entity shall disclose qualitative and quantitative information about all of the following:

• its contracts with customers (see paragraphs 113–122);
• the significant judgements, and changes in the judgements, made in applying this Standard to those contracts (see paragraphs 123–126); and
• any assets recognised from the costs to obtain or fulfil a contract with a customer in accordance with paragraph 91 or 95 (see paragraphs 127–128).

Objective

The objective of this Standard is to specify the financial reporting requirements for regulatory deferral account balances that arise when an entity provides goods or services to customers at a price or rate that is subject to rate regulation.

Scope

An entity is permitted to apply the requirements of this Standard in its first IFRS financial statements if and only if it:

• conducts rate-regulated activities; and
• recognised amounts that qualify as regulatory deferral account balances in its financial statements in accordance with its previous GAAP.

Recognition and measurement

An entity that has rate-regulated activities and that is within the scope of, and elects to apply, this Standard shall apply paragraphs 10 and 12 of IAS 8 when developing its accounting policies for the recognition, measurement, impairment and derecognition of regulatory deferral account balances

Defined terms

first IFRS financial statements The first annual financial statements in which an entity adopts International Financial Reporting Standards (IFRS), by an explicit and unreserved statement of compliance with IFRS.

first-time adopter An entity that presents its first IFRS financial statements.

previous GAAP The basis of accounting that a first-time adopter used immediately before adopting IFRS.

rate-regulated activities An entity’s activities that are subject to rate regulation.

rate regulation A framework for establishing the prices that can be charged to customers for goods or services and that framework is subject to oversight and/or approval by a rate regulator.

rate regulator An authorised body that is empowered by statute or regulation to establish the rate or a range of rates that bind an entity. The rate regulator may be a third-party body or a related party of the entity, including the entity’s own governing board, if that body is required by statute or regulation to set rates both in the interest of the customers and to ensure the overall financial viability of the entity.

regulatory deferral account balance The balance of any expense (or income) account that would not be recognised as an asset or a liability in accordance with other Standards, but that qualifies for deferral because it is included, or is expected to be included, by the rate regulator in establishing the rate(s) that can be charged to customers.

Disclosure

An entity that elects to apply this Standard shall disclose information that enables users to assess:

• the nature of, and the risks associated with, the rate regulation that establishes the price(s) that the entity can charge customers for the goods or services it provides; and
• the effects of that rate regulation on its financial position, financial performance and cash flows.

Objective

This IFRS:

• defines fair value;
• sets out in a single IFRS a framework for measuring fair value; and
• requires disclosures about fair value measurements.

Scope

This IFRS applies when another IFRS requires or permits fair value measurements or disclosures about fair value measurements (and measurements, such as fair value less costs to sell, based on fair value or disclosures about those measurements), except as specified in paragraphs 6 and 7.

Measurement

This IFRS defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

A fair value measurement is for a particular asset or liability. Therefore, when measuring fair value an entity shall take into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date. Such characteristics include, for example, the following:

• condition and location of the asset; and
• restrictions, if any, on the sale or use of the asset.

Defined terms

active market A market in which transactions for the asset or liability take place with sufficient frequency and volume to provide pricing information on an ongoing basis

cost approach A valuation technique that reflects the amount that would be required currently to replace the service capacity of an asset (often referred to as current replacement cost).

entry price The price paid to acquire an asset or received to assume a liability in an exchange transaction

exit price The price that would be received to sell an asset or paid to transfer a liability.

expected cash flow The probability-weighted average (ie mean of the distribution) of possible future cash flows.

air value The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

highest and best use The use of a non-financial asset by market participants that would maximise the value of the asset or the group of assets and liabilities (eg a business) within which the asset would be used.

income approach Valuation techniques that convert future amounts (eg cash flows or income and expenses) to a single current (ie discounted) amount. The fair value measurement is determined on the basis of the value indicated by current market expectations about those future amounts.

inputs The assumptions that market participants would use when pricing the asset or liability, including assumptions about risk, such as the following:

• the risk inherent in a particular valuation technique used to measure fair value (such as a pricing model); and
• the risk inherent in the inputs to the valuation technique.

Inputs may be observable or unobservable.

Level 1 inputs Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date.

Level 2 inputs Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.

Level 3 inputs Unobservable inputs for the asset or liability.

market approach A valuation technique that uses prices and other relevant information generated by market transactions involving identical or comparable (ie similar) assets, liabilities or a group of assets and liabilities, such as a business.

market-corroborated inputs Inputs that are derived principally from or corroborated by observable market data by correlation or other means.

market participant Buyers and sellers in the principal (or most advantageous) market for the asset or liability that have all of the following characteristics:

• They are independent of each other, ie they are not related parties as defined in IAS 24, although the price in a related party transaction may be used as an input to a fair value measurement if the entity has evidence that the transaction was entered into at market terms.
• They are knowledgeable, having a reasonable understanding about the asset or liability and the transaction using all available information, including information that might be obtained through due diligence efforts that are usual and customary.
• They are able to enter into a transaction for the asset or liability.
• They are willing to enter into a transaction for the asset or liability, ie they are motivated but not forced or otherwise compelled to do so.

most advantageous market The market that maximises the amount that would be received to sell the asset or minimises the amount that would be paid to transfer the liability, after taking into account transaction costs and transport costs.

non-performance risk The risk that an entity will not fulfil an obligation. Non-performance risk includes, but may not be limited to, the entity’s own credit risk.

observable inputs Inputs that are developed using market data, such as publicly available information about actual events or transactions, and that reflect the assumptions that market participants would use when pricing the asset or liability.

orderly transaction A transaction that assumes exposure to the market for a period before the measurement date to allow for marketing activities that are usual and customary for transactions involving such assets or liabilities; it is not a forced transaction (eg a forced liquidation or distress sale).

principal market The market with the greatest volume and level of activity for the asset or liability.

risk premium Compensation sought by risk-averse market participants for bearing the uncertainty inherent in the cash flows of an asset or a liability. Also referred to as a ‘risk adjustment’.

transaction costs The costs to sell an asset or transfer a liability in the principal (or most advantageous) market for the asset or liability that are directly attributable to the disposal of the asset or the transfer of the liability and meet both of the following criteria:

• They result directly from and are essential to that transaction.
• They would not have been incurred by the entity had the decision to sell the asset or transfer the liability not been made (similar to costs to sell, as defined in IFRS 5).

transport costs The costs that would be incurred to transport an asset from its current location to its principal (or most advantageous) market.

unit of account The level at which an asset or a liability is aggregated or disaggregated in an IFRS for recognition purposes.

unobservable inputs Inputs for which market data are not available and that are developed using the best information available about the assumptions that market participants would use when pricing the asset or liability.

Disclosure

An entity shall disclose information that helps users of its financial statements assess both of the following:

• for assets and liabilities that are measured at fair value on a recurring or non-recurring basis in the statement of financial position after initial recognition, the valuation techniques and inputs used to develop those measurements.
• for recurring fair value measurements using significant unobservable inputs (Level 3), the effect of the measurements on profit or loss or other comprehensive income for the period.

Objective

The objective of this IFRS is to require an entity to disclose information that enables users of its financial statements to evaluate:

• the nature of, and risks associated with, its interests in other entities; and
• the effects of those interests on its financial position, financial performance and cash flows.

Scope

This IFRS shall be applied by an entity that has an interest in any of the following:

• subsidiaries
• joint arrangements (ie joint operations or joint ventures)
• associates
• unconsolidated structured entities.

Defined terms

income from a structured entity For the purpose of this IFRS, income from a structured entity includes, but is not limited to, recurring and non-recurring fees, interest, dividends, gains or losses on the remeasurement or derecognition of interests in structured entities and gains or losses from the transfer of assets and liabilities to the structured entity.

interest in another entity For the purpose of this IFRS, an interest in another entity refers to contractual and non-contractual involvement that exposes an entity to variability of returns from the performance of the other entity. An interest in another entity can be evidenced by, but is not limited to, the holding of equity or debt instruments as well as other forms of involvement such as the provision of funding, liquidity support, credit enhancement and guarantees. It includes the means by which an entity has control or joint control of, or significant influence over, another entity. An entity does not necessarily have an interest in another entity solely because of a typical customer supplier relationship.

structured entity An entity that has been designed so that voting or similar rights are not the dominant factor in deciding who controls the entity, such as when any voting rights relate to administrative tasks only and the relevant activities are directed by means of contractual arrangements.

Disclosure

Consolidated Financial Statements, Joint Arrangements and Disclosure of Interests in Other Entities: Transition Guidance (Amendments to IFRS 10, IFRS 11 and IFRS 12) was approved for issue by the fourteen members of the International Accounting Standards Board.

Objective

The objective of this IFRS is to establish principles for financial reporting by entities that have an interest in arrangements that are controlled jointly (ie joint arrangements).

Scope

This IFRS shall be applied by all entities that are a party to a joint arrangement

Defined terms

joint arrangement An arrangement of which two or more parties have joint control

joint control The contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require the unanimous consent of the parties sharing control.

joint operation A joint arrangement whereby the parties that have joint control of the arrangement have rights to the assets, and obligations for the liabilities, relating to the arrangement.

joint operator A party to a joint operation that has joint control of that joint operation.

joint venture A joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the arrangement

joint venturer A party to a joint venture that has joint control of that joint venture.

party to a joint arrangement An entity that participates in a joint arrangement, regardless of whether that entity has joint control of the arrangement.

separate vehicle A separately identifiable financial structure, including separate legal entities or entities recognised by statute, regardless of whether those entities have a legal personality.

Disclosure

Consolidated Financial Statements, Joint Arrangements and Disclosure of Interests in Other Entities: Transition Guidance (Amendments to IFRS 10, IFRS 11 and IFRS 12) was approved for issue by the fourteen members of the International Accounting Standards Board.

Objective

The objective of this IFRS is to establish principles for the presentation and preparation of consolidated financial statements when an entity controls one or more other entities.

Scope

An entity that is a parent shall present consolidated financial statements. This IFRS applies to all entities, except as follows:

a parent need not present consolidated financial statements if it meets all the following conditions: 

• it is a wholly-owned subsidiary or is a partially-owned subsidiary of another entity and all its other owners, including those not otherwise entitled to vote, have been informed about, and do not object to, the parent not presenting consolidated financial statements;
• its debt or equity instruments are not traded in a public market (a domestic or foreign stock exchange or an over-the-counter market, including local and regional markets);
• it did not file, nor is it in the process of filing, its financial statements with a securities commission or other regulatory organisation for the purpose of issuing any class of instruments in a public market; and
• its ultimate or any intermediate parent produces financial statements that are available for public use and comply with IFRSs, in which subsidiaries are consolidated or are measured at fair value through profit or loss in accordance with this IFRS.

Defined terms

consolidated financial statements The financial statements of a group in which the assets, liabilities, equity, income, expenses and cash flows of the parent and its subsidiaries are presented as those of a single economic entity.

control of an investee An investor controls an investee when the investor is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee.

decision maker An entity with decision-making rights that is either a principal or an agent for other parties.

group A parent and its subsidiaries

investment entity An entity that:

• obtains funds from one or more investors for the purpose of providing those investor(s) with investment management services;
• commits to its investor(s) that its business purpose is to invest funds solely for returns from capital appreciation, investment income, or both; and
• measures and evaluates the performance of substantially all of its investments on a fair value basis.

non-controlling interest Equity in a subsidiary not attributable, directly or indirectly, to a parent.

parent An entity that controls one or more entities.

power Existing rights that give the current ability to direct the relevant activities.

protective rights Rights designed to protect the interest of the party holding those rights without giving that party power over the entity to which those rights relate.

relevant activities For the purpose of this IFRS, relevant activities are activities of the investee that significantly affect the investee’s returns

removal rights Rights to deprive the decision maker of its decisionmaking authority

subsidiary An entity that is controlled by another entity.

Disclosure

Consolidated Financial Statements, Joint Arrangements and Disclosure of Interests in Other Entities: Transition Guidance (Amendments to IFRS 10, IFRS 11 and IFRS 12) was approved for issue by the fourteen members of the International Accounting Standards Board.