SIC-15, issued by the Standard Interpretations Committee (SIC) in July 1999 and effective after January 1, 1999, explains how both lessees and lessors should recognize incentives related to operating leases. It states that lease incentives, like rent-free periods or relocation cost contributions, are part of the lease's overall value. According to IAS 17.24 and 17.42 (rev. 1997), these incentives should reduce lease income or expense and be recognized evenly over the lease term by both parties. As of January 1, 2019, SIC-15 was superseded by IFRS 16.
Lessee IFRS 16, paragraph 5, provides that lessees are allowed to choose not to recognize an asset and lease liability for two types of leases: short-term leases and low-value leases. This means that lessees can opt for operating lease accounting for these lease categories. If this option is taken, IFRS 16, paragraph 6, mandates that the lease payments must be recognized as an expense. This can be done either on a straight-line basis over the lease term or using another systematic basis that reflects the benefit received by the lessee.
Lessor According to IFRS 16, paragraph 81, lessors must recognize lease payments from operating leases as income either on a straight-line basis or another systematic basis that better reflects the asset's usage pattern. An underlying asset subject to operating lease shall be presented on the lessor's
statement of financial position based on its nature. The underlying asset is still the lessor's asset. As a consequence, the lessor is responsible for ownership costs, including depreciation, property taxes, insurance, and maintenance, but can pass certain costs (taxes, insurance, maintenance) to the lessee. == See also ==