IFRS16 Lease Accounting Example

Simple Example of the accounting for Leases under IFRS16

This model shows the steps to recognise a "right-of-use" asset and its respective accounting entry
Why did i make this?
1. As a refresh of my knowledge and understanding. The impact for a company is where it has an "operating lease" under IAS 17, they will have to reclass this to the balance sheet and capitalise it as a "right-of-use" asset.
2. To illustrate my understanding of accounting nuances and help others conceptualise this relatively new accounting principle.

How did i make this? - The Basic Setup
1. The key aspect of lease accounting is that we recognise the present value of the minimum lease payments, over a specific contractual time period. In this case its 80k over 6 years at an implict rate of 6%. This illustration excludes any direct costs or incentives associated with the lease asset.
2. The "Notes" tab contains the journal entries. The asset itself is written off at the end of the 6 years, and there is a corresponding lease liability with associated interest expense over the 6-year period.
3. The "Workings" tabs has most of the calculations, and the output of those calculations is summarised in the proforma financial statements in the "Example" sheet