CIMA F1 Syllabus B. Financial Statements - Leases - Exemptions - Notes ^{4 / 4}

So now we know that all lease contracts mean we have to show

1. A right to use Asset

2. A Liability

Well.. there are some exemptions..

Exemption 1 - Short Term Leases

These are less than 12 months contracts (unless there's an option to extend that you'll probably take or an option to purchase)

1. Just expense to the Income Statement (on a straight line / systematic basis)

2. Each class of asset must have the same treatment

Exemption 2: Low Value Assets

e.g. IT equipment, office furniture with a value of less than $5,000

1. Just expense to the Income Statement (on a straight line basis)

2. Choice is made on a lease by lease basis