Annual Report 2019-20

Noosa Shire Council

Notes to the Financial Statements
for the year ended 30 June 2020

Note 28. Changes in Accounting Policy                      (continued)


Lease standard - AASB 16

Council as a lessee
Under the previous lease accounting standard, Council assessed whether leases were operating or finance
leases, based on its assessment of whether the significant risks and rewards of ownership had been
transferred to Council or remained with the lessor. Under AASB 16, there is no differentiation between finance
and operating leases for the lessee and therefore all leases which meet the definition of a lease are recognised
on the Statement of Financial Position (except for short-term leases and leases of low-value assets).
Council has used the exception to lease accounting for short-term leases and leases of low-value assets,
and the lease expense relating to these leases is recognised in the Statement of Comprehensive Income
on a straight- line basis.

Practical expedients used on transition
AASB 16 includes a number of practical expedients which can be used on transition. Council has used the
following expedients:
- Lease liabilities have been discounted using the Council’s incremental borrowing rate at 1 July 2019.
- Used hindsight when determining the lease term if the contract contains options to extend or terminate the
  lease.

Impact of adopting AASB 16 at 1 July 2019

Council has recognised right-of-use assets and lease liabilities of $199,719 at 1 July 2019 for leases
previously classified as operating leases.
The weighted average lessee’s incremental borrowing rate applied to lease liabilities at 1 July 2019 was 2.31%.


                                                                                                               $'000

Leases Opening Balance Reconciliation

Operating Lease Commitment at 30 June 2019 per Council Financial Statements                                        937
Discounted using the incremental borrowing rate at 1 July 2019                                                     922
Add:
Extension options reasonably certain to be exercised not included in the commitments note                           23
Less:
Leases for low-value assets included in commitments note                                                           (745)
Lease Liabilities recognised at 1 July 2019                                                                        200




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