How can I handle leases that need to be reported under both FASB ASC 842 and IFRS 16?
If a lease needs to be reported under both FASB ASC 842 and IFRS 16, we recommend entering the same lease twice if any of the sitautions below apply.
We recommend adding a new Reporting Entity labeled with "IFRS" for easy tracking of leases to be reported under IFRS.
Initial Application Dates: Depending on the organization, different initial application dates (e.g., 1/1/19 for IFRS, 1/1/21 for FASB) could drive differences in calculations:
- Different discount rates
- Different existing balances under previous accounting guidance affecting initial ROU Asset value
- Different transition policy election FASB/IFRS could impact calculations. See Accounting Policy templates at Administration/Policies.
Operating leases: A lease classified as operating under FASB ASC 842 would be a finance lease under IFRS 16 so these leases will need to be re-entered as Finance Leases.
Footnote: Selecting the IFRS 16 footnote excludes operating leases from the export.
Minimum Exemptions: IFRS has a $5,000 exemption limit.
Discount Rate: For nonpublic companies, the FASB allows for the risk-free rate election for the discount rate, IFRS does not.
Lease Revisions: If a revised lease resulted in a change in classification under FASB from finance to operating lease, the revised lease would have to be entered as a finance lease to properly report under IFRS 16.
Index-Based Payments: Lease payments based on an index need to be recorded as a revision under IFRS and a variable expense under FASB, although this might be immaterial.