Page 167 - InterloopAnnualReport2020

NOTES TO THE UNCONSOLIDATED
FINANCIAL STATEMENTS
For the year ended June 30, 2020
7.2
The details pertaining to right of use assets are disclosed in note 8.3 and related leases are disclosed in note 26.
Lease liabilities
At the commencement date of the lease, the Company recognizes lease liabilities measured at the present
value of lease payments to be made over the lease term. The lease payments include fixed payments
(including in–substance fixed payments) less any lease incentives receivable, variable lease payments that
depend on an index or a rate, and amounts expected to be paid under residual value guarantees.
The related payment obligations, net of finance costs are classified as current and long term liability
depending upon the timing of the payment.
In calculating the present value of lease payments, the Company uses the incremental borrowing rate at
the lease commencement date if the interest rate implicit in the lease is not readily determinable. After the
commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and
reduced for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if
there is a modification, a change in the lease term, a change in the in–substance fixed lease payments or a
change in the assessment to purchase the underlying asset.
Each lease payment is allocated between the liability and finance cost so as to achieve a constant rate on
the balance outstanding. The interest element of the rental is charged to statement of profit or loss over the
lease term.
Payments associated with short–term leases and leases of low–value assets are recognized on a straight–
line basis as an expense in profit or loss. Short–term leases are leases with a lease term of 12 months or less
and leases of low value items.
Impacts of adoption of IFRS 16 on these unconsolidated financial statements
The Company has applied IFRS 16 using the modified retrospective approach, under which the cumulative
effect of initial application is recognized in retained earnings at July 01, 2019. Accordingly, the comparative
information presented has not been restated.
On transition, the Company elected to apply the practical expedient to grandfather the assessment of which
transactions are leases. The Company applied IFRS 16 only to contracts that were previously identified
as leases. Contracts that were not identified as leases under IAS 17 and IFRIC 4 were not reassessed for
whether there is a lease under IFRS 16.
At transition, for lease classified as operating lease under IAS 17, lease liability was measured at the present
value of the remaining lease payments, discounted at the Company’s incremental borrowing rate as at 01
July 2019 and right–of–asset was measured at an amount equal to the present value of the remaining lease
payments adjusted by the amount of any prepaid or accrued lease payments, if any. Difference of lease
asset and liability has been charged to equity.
The Company used the following practical expedients when applying IFRS 16 to leases previously classified
as operating leases under IAS 17.
– Used hindsight when determining the lease term if the contract contains options to extend or terminate
the lease.
– Excluded initial direct costs from measuring the right–of–use asset at the date of initial application.
– Did not recognize right of use asset and liabilities for leases where the lease term ends within 12 months
of the date of the initial application.
– Did not recognize right of use assets and liabilities for leases of low value.
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