Introduction and initial recognition

In this lesson

1. 0:00 Introduction to leasing basics
2. 3:18 Initial recognition of lease liability
3. 6:48 Right of use asset valuation
4. 8:35 Worked example: calculating lease liability
5. 13:15 IFRS 16 exemptions for short-term leases
6. 15:11 Practical application: low-value asset treatment

About this lesson

The session covers the fundamental definitions of leases, the roles of lessors and lessees, and the core principle that lessees must recognise both a lease liability and a right-of-use asset on their balance sheet, regardless of legal ownership. You'll work through the mechanics of calculating the lease liability by discounting all expected lease payments to present value, and how to determine the right-of-use asset cost by combining the liability amount with any advance payments and directly attributable costs. The session also explains the practical exemptions available under IFRS 16 for short-term leases (12 months or less) and low-value assets, where simpler straight-line expense recognition applies instead. By the end, you'll understand when and how to apply lease accounting, complete with worked examples showing the journal entries and financial statement impact.

Duration: 17m