At year end, the lessee's statement of profit or loss includes which two components in the lease split (SPL)?

At year end, the lessee's statement of profit or loss includes which two components in the lease split (SPL)?

• A. Depreciation charge for asset and interest on the lease liability
• B. Rental expense and amortisation
• C. Depreciation and the lease payment
• D. Insurance and maintenance costs

Answer: (A)

Under IFRS 16, a lessee recognises a right-of-use asset and a lease liability. At year end, the lease-related items that appear in the statement of profit or loss are two amounts: the depreciation charge on the right-of-use asset, and the interest expense on the lease liability. The depreciation reflects using up the leased asset over the lease term (or its useful life), while the interest expense represents the financing cost of the lease liability. Lease payments themselves reduce the liability on the balance sheet and are not shown as a single rental expense in the P&L. Insurance and maintenance costs aren’t presented as a lease-split item in the P&L under IFRS 16; they’re treated as incurred costs unless they’re part of the lease agreement.

Under IFRS 16, a lessee recognises a right-of-use asset and a lease liability. At year end, the lease-related items that appear in the statement of profit or loss are two amounts: the depreciation charge on the right-of-use asset, and the interest expense on the lease liability. The depreciation reflects using up the leased asset over the lease term (or its useful life), while the interest expense represents the financing cost of the lease liability. Lease payments themselves reduce the liability on the balance sheet and are not shown as a single rental expense in the P&L. Insurance and maintenance costs aren’t presented as a lease-split item in the P&L under IFRS 16; they’re treated as incurred costs unless they’re part of the lease agreement.