IFRIC 22 and Incremental borrowing rate: Difference between pages

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''Financial reporting - foreign exchange''.
''Financial reporting - IFRS 16''.


IFRIC 22 is an Interpretation of IAS 21 (The Effects of Changes in Foreign Exchange Rates).
(IBR).


The Interpretation deals with consideration paid or receive in advance.
The lessee's Incremental Borrowing Rate is a key concept in financial reporting for leases under IFRS 16.


It covers foreign currency transactions when an entity recognises a non-monetary asset or non-monetary liability arising from the payment or receipt of advance consideration before the entity recognises the related asset, expense or income.


The incremental borrowing rate is the rate the lessee would pay to borrow:
*Over a term similar to the lease term
*With a similar security


Under IFRIC 22:


*The date of the transaction, for the purpose of determining the exchange rate, is the date of initial recognition of the non-monetary prepayment asset or deferred income liability.  
When the interest rate implicit in the lease cannot be determined, the IBR shall be used instead, to discount the related lease liabilities and assets for reporting under IFRS 16.


*If there are multiple payments or receipts in advance, a date of transaction is established for each payment or receipt.


==See also==
*[[DIA]]
*[[IFRS 16]]
*[[Internal rate of return]]
*[[Interest rate implicit in a lease]]
*[[Lease]]


Effective from January 2018.


==Other links==
[https://www.treasurers.org/thetreasurer/definitive-guide-to-deriving-ifrs-16-discount-rates Definitive guide to deriving IFRS 16 discount rates: The Treasurer]


== See also ==
[[Category:Accounting,_tax_and_regulation]]
* [[Foreign exchange]]
* [[IAS 21]]
* [[IFRIC]]
* [[International Financial Reporting Standards]]
 
[[Category:Compliance_and_audit]]
[[Category:Compliance_and_audit]]

Revision as of 09:09, 21 August 2019

Financial reporting - IFRS 16.

(IBR).

The lessee's Incremental Borrowing Rate is a key concept in financial reporting for leases under IFRS 16.


The incremental borrowing rate is the rate the lessee would pay to borrow:

  • Over a term similar to the lease term
  • With a similar security


When the interest rate implicit in the lease cannot be determined, the IBR shall be used instead, to discount the related lease liabilities and assets for reporting under IFRS 16.


See also


Other links

Definitive guide to deriving IFRS 16 discount rates: The Treasurer