Question
Under Ind AS 116, a company leases an asset for 5 years.
On transition, it recognizes a right-of-use asset and corresponding lease liability. However, the company had capitalized operating leases under previous GAAP. What transition approach has the company likely used?Solution
Recognition of right-of-use asset for previously capitalized operating leases indicates a full retrospective approach. Under modified retrospective, previously capitalized leases under Indian GAAP are not re-evaluated.
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