# Commission Regulation (EU) 2017/1986 of 31 October 2017 amending Regulation (EC) No 1126/2008 adopting certain international accounting standards in accordance with Regulation (EC) No 1606/2002 of the European Parliament and of the Council as regards International Financial Reporting Standard 16 (Text with EEA relevance) (revoked) EU Regulation 2017/1986 · adopted 31 October 2017 Commission Regulation (EU) 2017/1986 of 31 October 2017 amending Regulation (EC) No 1126/2008 adopting certain international accounting standards in accordance with Regulation (EC) No 1606/2002 of the European Parliament and of the Council as regards International Financial Reporting Standard 16 (Text with EEA relevance) ## Introductory text Commission Regulation (EU) 2017/1986 of 31 October 2017 amending Regulation (EC) No 1126/2008 adopting certain international accounting standards in accordance with Regulation (EC) No 1606/2002 of the European Parliament and of the Council as regards International Financial Reporting Standard 16 (Text with EEA relevance) (revoked) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## Signature . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ### Division International Financial Reporting Standard 16: Leases ### Division: International Financial Reporting Standard 16 Leases ### Division: OBJECTIVE ## 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ### Division: SCOPE ## 3 An entity shall apply this Standard to all leases, including leases of right-of-use assets in a sublease, except for: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ### Division: RECOGNITION EXEMPTIONS (PARAGRAPHS B3–B8) ## 5 A lessee may elect not to apply the requirements in paragraphs 22–49 to: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 7 If a lessee accounts for short-term leases applying paragraph 6, the lessee shall consider the lease to be a new lease for the purposes of this Standard if: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ### Division: IDENTIFYING A LEASE (PARAGRAPHS B9–B33) ## 9 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 10 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 11 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ### Division: Separating components of a contract ## 12 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ### Division: Lessee ## 13 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 14 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 15 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 16 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ### Division: Lessor ## 17 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ### Division: LEASE TERM (PARAGRAPHS B34–B41) ## 18 An entity shall determine the lease term as the non-cancellable period of a lease, together with both: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 19 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 20 A lessee shall reassess whether it is reasonably certain to exercise an extension option, or not to exercise a termination option, upon the occurrence of either a significant event or a significant change in circumstances that: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 21 An entity shall revise the lease term if there is a change in the non-cancellable period of a lease. For example, the non-cancellable period of a lease will change if: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ### Division: LESSEE ### Division: Recognition ## 22 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ### Division: Measurement ### Division: Initial measurement ### Division: Initial measurement of the right-of-use asset ## 23 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 24 The cost of the right-of-use asset shall comprise: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 25 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ### Division: Initial measurement of the lease liability ## 26 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 27 At the commencement date, the lease payments included in the measurement of the lease liability comprise the following payments for the right to use the underlying asset during the lease term that are not paid at the commencement date: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 28 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ### Division: Subsequent measurement ### Division: Subsequent measurement of the right-of-use asset ## 29 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ### Division: Cost model ## 30 To apply a cost model, a lessee shall measure the right-of-use asset at cost: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 31 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 32 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 33 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ### Division: Other measurement models ## 34 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 35 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ### Division: Subsequent measurement of the lease liability ## 36 After the commencement date, a lessee shall measure the lease liability by: (a)increasing the carrying amount to reflect interest on the lease liability; (b)reducing the carrying amount to reflect the lease payments made; and (c)remeasuring the carrying amount to reflect any reassessment or lease modifications specified in paragraphs 39–46, or to reflect revised in-substance fixed lease payments (see paragraph B42). ## 37 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 38 After the commencement date, a lessee shall recognise in profit or loss, unless the costs are included in the carrying amount of another asset applying other applicable Standards, both: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ### Division: Reassessment of the lease liability ## 39 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 40 A lessee shall remeasure the lease liability by discounting the revised lease payments using a revised discount rate, if either: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 41 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 42 A lessee shall remeasure the lease liability by discounting the revised lease payments, if either: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 43 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ### Division: Lease modifications ## 44 A lessee shall account for a lease modification as a separate lease if both: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 45 For a lease modification that is not accounted for as a separate lease, at the effective date of the lease modification a lessee shall: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 46 For a lease modification that is not accounted for as a separate lease, the lessee shall account for the remeasurement of the lease liability by: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ### Division: Presentation ## 47 A lessee shall either present in the statement of financial position, or disclose in the notes: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 48 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 49 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 50 In the statement of cash flows, a lessee shall classify: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ### Division: Disclosure ## 51 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 52 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 53 A lessee shall disclose the following amounts for the reporting period: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 54 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 55 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 56 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 57 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 58 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 59 In addition to the disclosures required in paragraphs 53–58, a lessee shall disclose additional qualitative and quantitative information about its leasing activities necessary to meet the disclosure objective in paragraph 51 (as described in paragraph B48). This additional information may include, but is not limited to, information that helps users of financial statements to assess: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 60 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ### Division: LESSOR ### Division: Classification of leases (paragraphs B53–B58) ## 61 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 62 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 63 Whether a lease is a finance lease or an operating lease depends on the substance of the transaction rather than the form of the contract. Examples of situations that individually or in combination would normally lead to a lease being classified as a finance lease are: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 64 Indicators of situations that individually or in combination could also lead to a lease being classified as a finance lease are: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 65 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 66 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ### Division: Finance leases ### Division: Recognition and measurement ## 67 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ### Division: Initial measurement ## 68 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 69 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ### Division: Initial measurement of the lease payments included in the net investment in the lease ## 70 At the commencement date, the lease payments included in the measurement of the net investment in the lease comprise the following payments for the right to use the underlying asset during the lease term that are not received at the commencement date: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ### Division: Manufacturer or dealer lessors ## 71 At the commencement date, a manufacturer or dealer lessor shall recognise the following for each of its finance leases: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 72 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 73 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 74 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ### Division: Subsequent measurement ## 75 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 76 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 77 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 78 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ### Division: Lease modifications ## 79 A lessor shall account for a modification to a finance lease as a separate lease if both: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 80 For a modification to a finance lease that is not accounted for as a separate lease, a lessor shall account for the modification as follows: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ### Division: Operating leases ### Division: Recognition and measurement ## 81 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 82 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 83 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 84 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 85 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 86 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ### Division: Lease modifications ## 87 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ### Division: Presentation ## 88 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ### Division: Disclosure ## 89 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 90 A lessor shall disclose the following amounts for the reporting period: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 91 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 92 A lessor shall disclose additional qualitative and quantitative information about its leasing activities necessary to meet the disclosure objective in paragraph 89. This additional information includes, but is not limited to, information that helps users of financial statements to assess: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ### Division: Finance leases ## 93 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 94 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ### Division: Operating leases ## 95 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 96 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 97 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ### Division: SALE AND LEASEBACK TRANSACTIONS ## 98 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ### Division: Assessing whether the transfer of the asset is a sale ## 99 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ### Division: Transfer of the asset is a sale ## 100 If the transfer of an asset by the seller-lessee satisfies the requirements of IFRS 15 to be accounted for as a sale of the asset: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 101 If the fair value of the consideration for the sale of an asset does not equal the fair value of the asset, or if the payments for the lease are not at market rates, an entity shall make the following adjustments to measure the sale proceeds at fair value: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 102 The entity shall measure any potential adjustment required by paragraph 101 on the basis of the more readily determinable of: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ### Division: Transfer of the asset is not a sale ## 103 If the transfer of an asset by the seller-lessee does not satisfy the requirements of IFRS 15 to be accounted for as a sale of the asset: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## Defined terms This appendix is an integral part of the Standard. ## Terms defined in other Standards and used in this Standard with the same meaning ## Appendix B Application guidance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## Appendix C Effective date and transition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## Appendix D Amendments to other Standards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . --- Source: https://www.legislation.gov.uk/eur/2017/1986 (the official version) Page: https://openlegislation.uk/eu-regulation-2017-1986 Contains public sector information licensed under the Open Government Licence v3.0. Source: legislation.gov.uk, The National Archives.