(i) IFRS 16 Recognition and Measurement Requirements for Lessees:

• Recognition:
  • Identifying a Lease: A lease is defined as a contract that provides the lessee the right to control an identified asset in exchange for consideration.
  • Control: The lessee must have the right to obtain nearly all economic benefits from using the asset and the right to direct its use.
  • Exemptions: Short-term leases (lease term of 12 months or less) and leases for low-value assets can be exempted. Lessees may recognize these leases as an expense rather than applying IFRS 16’s recognition requirements.
• Measurement:
  • Initial Measurement of Lease Liability:
    • Lease payments include fixed payments (minus any lease incentives), variable lease payments based on an index or rate, and amounts expected under residual value guarantees.
    • The present value of lease payments is calculated using the interest rate implicit in the lease, or, if not readily available, the lessee’s incremental borrowing rate.
  • Initial Measurement of Right-of-Use Asset:
    • Includes the initial measurement of the lease liability, lease payments made at or before the commencement date (minus any lease incentives), initial direct costs, and estimated costs to dismantle or restore the site.
  • Subsequent Measurement:
    • Lease Liability: The liability is adjusted for interest accrued and reduced by lease payments.
    • Right-of-Use Asset: Depreciated over the shorter of the asset’s useful life or lease term and is subject to impairment reviews per IAS 36.

(ii) Short-Term Lease Measurement for Lessees:

• Short-term leases are defined as leases with a term of 12 months or less at the commencement date. Lessees have the option to apply a simplified approach:
  • No Right-of-Use Asset or Lease Liability: Lessees do not recognize right-of-use assets or lease liabilities.
  • Expense Recognition: Lease payments are recognized as an expense on a systematic basis representing the lessee’s benefit from the asset.