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Operating Lease - Lease Expense

Received Response
edited Dec 18, 2020 7:58AM in Assets 4 comments


Operating Lease - Lease Expense


Operating Lease: In an operating lease under IFRS 16 both interest and depreciation are charged to P&L. In comparison of old standard and IFRS 16, the old standard says the lease expense is charged to P&L and the amount is same through out the life. Where as, as per IFRS 16, the interest and depreciation is charged to P&L, in the first few years the total of interest and depreciation is quite more than the lease expense, but over the lease term both the standards charge the same amount.

In Oracle, I could see lease expense is calculated as cost of asset + interest over the lease term / life of lease -- this gives again a straight line basis of recognizing lease expense. In oracle how can we simulate a test case where an operating lease charge lease expense a bit higher side in the first few years, but the total lease expense over the lease term would remain same.


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