AASB 16 Leases 5-8,B3-B8: Elect, by class for short-term leases and lease by lease for low-value assets, to expense payments straight-line or on another systematic basis, treating a modified or extended short-term lease as new

What does 5-8,B3-B8 require?

A lessee may keep short-term leases (twelve months or less with no purchase option) and leases whose underlying asset is of low value out of the balance sheet model, expensing the payments straight-line over the term or on another systematic basis that better reflects the benefit pattern. Low value is judged on the asset when new regardless of the lessee's size, requires that the lessee can benefit from the asset alone or with readily available resources and that it is not highly dependent on or interrelated with other assets, and is unavailable where the asset is subleased or expected to be; tablets, personal computers, small office furniture and telephones are the Standard's illustrations, a car is not. A short-term lease that is modified or whose term changes becomes a new lease. The short-term election is made by class of underlying asset (assets of similar nature and use), the low-value election lease by lease.