tell us something about IND As 116 ?

Question

Accepted Answer

IND AS 116 is a new lease accounting standard introduced by the Institute of Chartered Accountants of India (ICAI).

IND AS 116 stands for Indian Accounting Standard 116.
It replaces the previous lease accounting standard, IND AS 17.
The standard applies to all entities that prepare financial statements in accordance with Indian Accounting Standards.
IND AS 116 introduces a single lessee accounting model, which requires lessees to recognize assets and liabilities for all leases with a term of more than 12 months.
Under the new standard, lessees are required to recognize a right-of-use asset and a lease liability on their balance sheet.
The standard also introduces new disclosure requirements for leases.
IND AS 116 aims to provide a more transparent and consistent approach to lease accounting.
It brings significant changes to the way leases are accounted for and reported in financial statements.

Accepted Answer

Lease contracts are legally and monetarily crucial, because of the huge financial implications they have on the parties’ involved. With an aim to make the principles on lease contracts more progressive and exhaustive, the government, in April 2019, introduced Indian Accounting Standards (Ind-AS) 116, which replaced the Ind AS 17. Launched to establish the key rules for recognition, measurement, presentation and disclosure of leases, the prime purpose of Ind AS 116 is to provide financial statements of lease transactions in a faithful and uncomplicated manner.

Ind AS 116 primarily affects the accounting by lessees and will result in the recognition of almost all leases on the balance sheet. Ind AS 116 introduces a lessee accounting model that requires a lessee to recognise liabilities and assets for all leases, unless the asset is of low value. A person, or an entity, entering into lease contracts with a term of more than 12 months, has to abide by the standards set under Ind AS 116.

tell us something about IND As 116 ?

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