under IND AS 116, all leases are required to be recognized on the balance sheet as a right-of-use asset and a lease liability. This means that companies will now recognize interest expense on all leases, including operating leases, over the lease term. So, companies may see an increase in their interest expense.
Under IND AS 116, the right-of-use asset related to a lease will be depreciated over the lease term. This means that the asset will be gradually written off over the period of the lease, which may result in a higher depreciation expense in the earlier years of the lease.
In summary, under IND AS 116, companies will recognize interest expense on all leases and will have to depreciate the right-of-use asset related to the lease over the lease term. This could result in higher interest expense and depreciation expense in the earlier years of the lease.
| Subscribe To Our Free Newsletter |
