MFRS 16 Leases will be effective from January 2019. The new standard provides a new approach for the identification of lease arrangements and their treatment in the financial statements of both lessees and lessors. It supersedes MFRS 117 Leases and its related interpretations.
This one-day workshop, designed specifically for accounting and finance leaders, presents a comprehensive analysis of the technical requirements of the new standard for lease accounting. It provides a detailed understanding of the changes from current standards to the new standard, analysing the rationale behind the new standard, its implications and problem areas to watch out for.
Examine the impact of the new MFRS 16 on your business decisions. The new requirements will inevitably impose a new reporting burden and significantly impact an entity’s financial position, financial performance and cash flow.
Discover the best ways to handle the new rules and avoid pitfalls. Learn what you need to do NOW to prepare for the new changes.
What You Will Learn
At the end of the workshop, you will:
- Examine the significant differences between the new and the current leasing standard
- Identify and combat the implementation challenges of the new standard
- Learn how the new requirements will be accounted for in practice
- Enhance your understanding of the key concepts in the accounting treatment of leases
The overall technical issues
- New Principles
- The scope of coverage and interaction with other Standards
- Identifying a lease contract
- Identifying and accounting for short-term lease and low value lease
- Separating components of a lease contract for lessee and lessor
- Handling complex lease terms and understanding their impact on financial statements
- Introduction to the new principles on sale and leaseback transactions
Accounting for Lessee
- Recognition principles
- When to recognise a “lease liability” and a “right-of-use asset”
- Measurement principles for initial and subsequent accounting
- Lease obligations and right-of-use assets
- Reassessment of the lease liability
- Amortization and impairment of the right-of-use assets
- Presentation and disclosure of lease liabilities and right-of-use assets
- Practical illustrations on setting up the ledger accounts
- Examine the impact on financial statements and ratios analysis
- Transitional provisions for the lessee
Accounting for Lessor
- Determining whether a lease is a finance lease or an operating lease
- Finance Lease
- Recognising and measuring the lease receivable assets
- Initial measurement of the amount of net investment in the lease
- Subsequent recognition of finance income over the lease term
- Presentation and disclosure of lease receivable assets
- Operating lease
- How to recognise the income of an operating lease
- Recognition and measurement of the underlying assets
- Depreciation or amortisation of the underlying assets
- Presentation and disclosure of the underlying assets subject to an operating lease
Special consideration for granting a lease of property
- How to classify and account for right-of-use property
- Lessee granting a sub-lease of the right-of-use property
- Granting a head-lease lease of property
- Granting a sub-lease of property
- Classification consideration for both lessee and Lessor:
- Whether to classify in accordance with IAS 40 Investment Property IAS 16 Property, Plant and Equipment
Sale and lease back transactions for both seller-lessee and buyer-lessor
- Deciding whether a transfer of an asset is a sale (Application of SB-FRS115 Revenue from contracts with customers)
- Accounting treatments for both seller-lessee and buyer-lessor for:
- Transfer of an asset that is a sale
- Accounting treatment where fair value sale consideration does not equal to fair value of the assets
- Transfer of asset that is not a sale
Danny Tan Boon Wooi has over 30 years of working experience in public practice, commerce and industry as a professional accountant and auditor. In the last 18 years, he is a partner of a consulting firm providing technical training and consultancy in IFRS and IPSAS (Accrual Accounting). He is currently a project manager with the Malaysian Accounting Standards Board in several projects. He is a member of Government Accounting Standards Advisory Committee working on the implementation of Malaysia Public Sector Accounting Standards.
Danny holds an Honours Degree in Economics from England, an MBA in Finance from Scotland and a Master in Advanced Business Practice from Australia. He is a member of CIMA (UK), ACCA (UK), ISCA, MIA and CTIM.
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