The MCA had notified the Ind AS via the Companies (Indian Accounting Standards) Rules, 2015. It measures the ROU based on option 1 i.e. Ind AS 116 Exploration for and Evaluation of Mineral Resources specifies the accounting for rights to explore for and evaluate mineral resources. Lessee accounting will undergo a profound transformation with the applicability of the new standard on leases, Ind AS 116- Leases. Ind AS 116/IFRS 16 represents the first major overhaul of lease accounting in over three decades. The objective of the new Standard is to ensure that lessees and lessors provide relevant information in a manner that faithfully represents those transactions. Company A transitions to Ind AS 116 with effect from 1 April 2019, using the modified retrospective method. Ind AS 116’s transition provisions are applied at the beginning of the annual reporting period in which the entity first applies the standard (i.e., the date of initial application). Ind AS is expected to replace Ind AS 17 WEF from its proposed effective date being for annual periods beginning on or after 1 st April, 2019. Subsequently, the MCA has notified the Companies (Indian Accounting Standards) (Amendment) Rules, 2016/2017 to carry out certain amendments/ omissions in the above Ind ASs and to introduce two new Ind AS 11 and 18. In the 2019 issue of Wealth Insight, we provided a detailed analysis of the new accounting standard Ind AS 116.It mandates lessees to recognise assets and liabilities for all leases with tenures of over 12 months. On March 30, 2019, the Ministry of Corporate Affairs notified the new standard to be effective for annual periods beginning on or after 1 April 2019. Ind AS 17 required to classify leases as finance lease and operating lease, the same in not required under Ind AS 116. Based on above, certain examples of disclosing impact of Ind AS 116 are illustrated below: Ind AS 116, Leases Nature of change Ind AS 116 was notified by Ministry of Corporate Affairs on 30 March 2019 and it is applicable for annual reporting periods beginning on or after 1 April 2019. We gave example of a few companies whose balance sheets … Ind AS 116, “ Leases” will be applicable on the companies The IASB has long considered the existing split between operating and finance leases as problematic as it has resulted in too much structuring and off-balance sheet financing. A note on Draft Ind AS 116 Leases The Accounting Standard Board has issued an exposure draft on Ind AS 116, Leases, with a proposed effective date of 1st April, 2019, subject to notification by Ministry of Corporate Affairs and Ind AS 116 supersedes Ind AS 17 ‘Leases’. as though Ind AS 116 was always applied. For example, an entity with a reporting date of 31 March 2020, applies the transition provisions on 1 April 2019. Hemal Shah. Under Ind AS 116, a lessee measures right-of-use assets similarly to other non-financial assets (such as property, plant and equipment) and lease liabilities similarly to other financial liabilities. Accordingly, Ind AS 116 contains scope exceptions for: (a) leases to explore for or use minerals, oil, natural gas and similar non-re-generative resources. Ind AS 116/ IFRS 16. Educational Material on Indian Accounting Standards 116, Leases - (14-01-2020) The new Leases standard Ind AS 116, Leases is effective from April 1, 2019, for companies implementing Ind AS. Ind-AS 116 Leases Overview Ind AS 116 is notified on March 29, 2019 with applicability for period beginning April 01, 2019 Major changes in the standard are as below - The Chamber of Tax Consultants – IND AS 116 – CA. Essentially, lessee accounting undergoes major change, … Ind AS 116 is largely converged with IFRS 16 Leases.