FINANCIALS 2019
2.1 Amendments to Accounting Standards that are mandatorily
effective for the current reporting period (Continued)
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b) Impact on Lessee Accounting
i. Former operating leases: AASB 16 changes how
the Company accounts for leases previously
classified as operating leases under AASB 17,
which were off balance sheet.
Applying AASB 16, for all leases (except as noted
below), the Company:
• Recognises right-of-use assets and lease
liabilities in the Statement of Financial
Position, initially measured at the present
value of the future lease payments;
• Recognises depreciation of right-of-use
assets and interest on lease liabilities in the
Statement of Profit or Loss;
• Separates the total amount of cash paid
into a principal portion (presented within
financing activities) and interest (presented
within financing activities) in the Consolidated
Statement of Cash Flows.
Lease incentives (e.g. rent-free period) are
recognised as part of the measurement of the
right-of-use assets and lease liabilities whereas
under AASB 17 they resulted in the recognition
of a lease incentive, amortised as a reduction of
rental expenses generally on a straight-line basis.
Under AASB 16, right-of-use assets are tested for
impairment in accordance with AASB 36.
For short-term leases (lease term of 12 months or
less) and leases of low-value assets (such as tablet
and personal computers, small items of office
furniture and telephones), the Company has opted
to recognise a lease expense on a straight-line
basis as permitted by AASB 16. This expense is
presented within ‘other expenses’ in profit or loss.
ii. Former finance leases
The main differences between AASB 16 and AASB 17, with respect to contracts formerly classified as finance
leases, is the measurement of the residual value guarantees provided by the lessee to the lessor. AASB 16
requires that the Company recognises as part of its lease liability only the amount expected to be payable
under a residual value guarantee, rather than the maximum amount guaranteed as required by AASB 17.
This change did not have a material effect on the Company’s financial statements.
In accordance with the transitional provisions, comparative figures have not been restated. The adjustments
are recognised in the opening balance sheet on 1 January 2019 as follows:
Retained earnings $
Closing balance as reported in the 31 December 2018 Financial Report 35,697,199
Decrease due to initial adoption of AASB16 (132,332)
Opening balance at 1 January 2019 35,564,867
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