Contract in currency other than in administration and IFRS16

In the series Lease Implementation Dilemmas, this time the topic is: Contract in currency other than in administration, in relation to IFRS16.

As is well known, IFRS16 has a particular impact on current and future operating leases.

Not only do these contracts have to be shown on the balance sheet.

Underlying policies are usually based on (national, legal) rules governing the capitalisation of assets in the entity’s country or reporting currency. And if these do not apply to the accounting itself, then often they do apply to the tax treatment.

Derived questions then arise with regard to:

• How do I hedge my currency risk?
• The discount rate applicable for the calculation of the initial value: the rate of the contract currency or the rate of the entity currency.
• What are the effects of IFRS16 leases, being monetary (i.e. not non-monetary) assets, and how do I keep these contracts separately identified in the accounts?

In fact, there are several dilemmas in parallel. Detailed considerations can be found in this document.
Give your opinion on the dilemmas in ‘Contract in currency other than in administration, in relation to IFRS16‘, privately via the contact form or in the discussion on LinkedIn.

The series Lease Implementation Dilemmas also has dealt with the dilemma:
– Non-refundable VAT