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    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?
    A Full retrospective Correct Answer Incorrect Answer
    B Modified retrospective with asset = liability Correct Answer Incorrect Answer
    C Modified retrospective with asset adjusted for prepayments Correct Answer Incorrect Answer
    D Prospective transition Correct Answer Incorrect Answer

    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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