Is everyone discounting (as in ignore) these entries in the balance sheet, when evaluating companies? (I understand the ifrs is designed to reflect previously off balance sheet financing on the face of the balance sheet)
Balance-sheet wise there’s the:
- right of use asset, being:
total lease liability + indirect costs + prepaid lease payments + cost of making good at the end of the lease - lease incentives received
- lease liability, being the
present value of future lease payments
In the P&L:
the right of use asset is depreciated to the P&L over the lease term. Presumably on a straight-line basis.
the lease liability is credited to the P&L over the lease term. i.e. the difference between the Net Present Value at balance sheet dates goes to the P&L.
(I’m not going into the cashflow effects!)
Using Creightons (CRL) HY as an example, RoU asset=£977k and Lease Liabilities £1,026k.
What does that mean? Not an awful lot?
If so, I think I preferred the old disclosure note! What do other people think?