Circular 2/2020 – Recognition of Lease Income and Expense on a Basis other than the Straight Line Basis under IFRS 16 – Leases

This circular addresses the recognition of lease income/expense, on a basis other than the straight-line basis, over the lease term. IFRS 16 requires recognition of lease income/expense on a straight-line basis or another systematic basis for (i) Lessors where the appropriate lease classification is an operating lease; (ii) Lessees where the lessee has elected not to apply the lease model in IFRS 16 paragraphs 22-49 – this is relevant where the underlying asset value is low or for short-term leases.