17.6 IFRS/ASPE Key Differences
| Item | ASPE | IFRS 16 |
|---|---|---|
| Lessee – capitalization criteria |
The criteria are much more prescriptive using numerical thresholds. Refer to details in section 17.2. A lease can be classified as an operating or a capital lease for the lessee. |
Evaluation uses a contract basis and criteria based on if right-of-use exists. More professional judgment is needed since the criteria are qualitative and do not include numeric thresholds. Virutally all leases are now capital leases except if it is deemed a low $-value or a duration of twelve months or less. |
| Lessor – capitalization criteria |
The same criteria are used as for the lessee, but two more criteria must be met to be capitalized by the lessor. Any capitalized leases are further broken down into either a sales-type lease or a direct-financing lease, depending on whether a profit exists. | The same as ASPE except capitalized leases for the lessor are classified as a finance lease, with manufacturer/dealer leases being further distinguished from other finance leases. |
| Lessee’s interest rate | Use the lower of the lessee’s incremental borrowing rate or the lessor’s implicit rate of return. | Use the implicit rate, if known, otherwise use the incremental borrowing rate. |
| Disclosure | Similar to the disclosures required for other assets, liabilities, or financial instruments. | Additional disclosures are required as noted above under disclosures. |
