Fit Identification Lease For Free

benefit from the lecture you should download the free lecture notes from open tuition calm when I'm gonna go through and look at specifically identifying whether or not there is or isn't a nice within a contract between two parties in the previous video we just made a really simple assumption didn't we the company a was the lessor Company B was the lessee du was it company a being a lessor own the asset company B as the lessee used that asset for rental payments over a lease period so we just assumed that there was a lease however you got to be very careful and look at the particulars of the contract between company a and Company B to identify if there is a lease if there is a lease identified then we will follow the rules of IFRS 16 if not we would have to go through there and follow the alternative treatment under the relevant accounting standard so how do we go through there and identify a lease and what I really like about this is that we really begin to convey the feeling and the flavor of what these IFRS is are all about and the new language that they contain ok so what you've got that if there is a lease first of all there needs to be a contract so a contract between the two parties is it a and B okay but it's what that contract gives right - okay so what you've got there is you see the word control the use of an assets okay so going back there to control if you control the asset it meets the definition of an asset and therefore there is a lease as Company B you are the lessee and therefore you recognize that lease within your financial statements okay we're ignoring the the low value and short lease exemptions that we have okay and that comes straight from is it paragraph nine of IRS 60s the needs of it we need to control the use of an identified asset okay again think you need to pay particular attention to that word identified okay think of it as a specific assets okay not just any asset out of a group of assets it's a specific identified asset okay and then what the standard then goes on to do that just a little bit more detail because it starts talking there about what we then mean by control and again this is what I really like about the standard in the way that it brings in the word control doesn't it by talking about whether or not we have the right to direct the assets or directly identified assets you so can we specifically dictate how the asset is used when that asset is used what that asset is used for okay going back you know think about groups you know we spoke about control and we spoke about control as being the power to direct the activity so if you direct something you have control okay so here you direct the identified asset use you have control if you have control you're gonna have a lease okay if there is a lease you account for it under IFRS 16 just notes again come back to the definition of an asset a resource that is controlled by an entity as a result of a past event but more importantly give you an inflow of...