RMG-110 has been updated to reflect the following changes:
- Removal of references to the Simple Lease Model and other transitional materials that are no longer relevant
- Inclusion of guidance under the ‘Discount Rates’ section on calculating Incremental Borrowing Rates.
For any queries, please contact Accounting Policy.
RMGs are guidance documents. The purpose of an RMG is to support PGPA Act entities and companies in meeting the requirements of the PGPA framework. As guides, RMGs explain the legislation and policy requirements in plain English. RMGs support accountable authorities and officials to apply the intent of the framework. It is an official’s responsibility to ensure that Finance guidance is monitored regularly for updates, including changes in policy/requirements.
Audience
This guide is relevant to Commonwealth officials responsible for the financial reporting of lease transactions.
Key points
This guide:
- assists Commonwealth entities with the application of Australian Accounting Standards Board (AASB) 16 Leases (AASB 16)
- summarises the major policy decisions of the Department of Finance (Finance) with regard to the application of AASB 16 and addresses the main issues raised by Commonwealth entities
- aims to achieve consistency in accounting treatment of leases amongst Commonwealth entities, which is necessary for the preparation of the Commonwealth Consolidated Financial Statements (CFS)
- provides Commonwealth entities with examples to calculate lease balances for common scenarios.
Introduction
Australian Accounting Standards Board (AASB) 16 Leases (AASB 16) requires the recognition of a right-of-use (ROU) asset and lease liability on the balance sheet for most leasing arrangements.
AASB 16 is the Australian equivalent to the International Accounting Standard Board (IASB) International Financial Reporting Standard 16 Leases (IFRS 16).
Application of all requirements is subject to the principles of materiality. Entities should document all assessments made in implementing the standard.
Resources
Related resources including appendices, related guidance, the PGPA Act and Rule, links and glossary terms are located in the right-hand menu under Tools and templates
IFRS 16 Leases - Illustrative Examples
- This document provides examples that accompany but are not part of IFRS 16. They illustrate aspects of IFRS 16 but are not intended to provide interpretative guidance. This attachment is available under Tools and templates.
- The spreadsheet provides several illustrative examples of common lease scenarios using the CBMS chart of accounts. Application of illustrative examples to specific entity lease details should be confirmed with audit teams as soon as possible. This attachment is available under Tools and templates.
Key information to assist you in meeting your financial reporting requirements
