CIMA F2 Syllabus B. Financial reporting standards - Components of a Lease - Notes ^{7 / 9}

So the supplier (lessor) has more than 1 obligation

These obligations might be lease components or a combination of lease and non-lease components.

For example, a contract for a car lease might be combined with maintenance (non lease component)

IFRS 16 says lease and non-lease components should be accounted for separately...

What is a separate component?

1. something the lessee can benefit from alone and

2. not dependent on other assets in the contract

What do you do with separate lease components?

Deal with them separately

1. The non-lease components should be assessed under IFRS 15 for separate performance obligations.

2. The lease components are treated as financial liabilities as normal under IFRS 16

So if you treat 2 components in a contract differently..

How do you separate them in terms of allocating an amount of the lease payment to them?

• Use their stand-alone prices (or an estimate if not available)

Practical expedient

Lessees are allowed not to separate lease and non-lease components and, instead, account for them as a single lease component. 

This accounting policy choice has to be made by class of underlying asset. 

Because not separating a non-lease component would increase the lessee’s lease liability, the IASB expects that a lessee will use this exemption only if the non-lease component is not significant.