Question

Under Ind AS 116, a company leases an asset for 5 years.

Q: Answer-Under Ind AS 116, a company leases an asset for 5 years. On transition, it recognizes a right-of-use...

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.

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?

A Full retrospective

B Modified retrospective with asset = liability

C Modified retrospective with asset adjusted for prepayments

D Prospective transition

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Under Ind AS 116, a company leases an asset for 5 years.

Solution