{"id":1644,"date":"2023-11-11T18:41:17","date_gmt":"2023-11-11T18:41:17","guid":{"rendered":"http:\/\/www.rnm.in\/blog\/?p=1644"},"modified":"2026-01-30T09:38:20","modified_gmt":"2026-01-30T09:38:20","slug":"difference-between-ind-as-116-and-as-19","status":"publish","type":"post","link":"https:\/\/www.rnm.in\/blog\/difference-between-ind-as-116-and-as-19\/","title":{"rendered":"DIFFERENCE BETWEEN IND AS 116 AND AS 19"},"content":{"rendered":"

Brief about Ind AS 116<\/b>: Ind AS 116 sets out the principles for the recognition, measurement, presentation and disclosure of leases and faithful representation of the transactions by lessees and lessors. This information gives a basis for users of financial statements to assess the effect that leases have on the financial position, financial performance and cash flows of an entity.<\/span><\/p>\n

The standard applies to all leases, including leases of right-of-use assets in a sublease, except for:<\/b><\/p>\n

(a) Leases to explore for or use minerals, oil, natural gas and similar non-regenerative resources;<\/span><\/p>\n

(b) Leases of biological assets within the scope of Ind AS 41, Agriculture held by a lessee;<\/span><\/p>\n

(c) Service concession arrangements within the scope of Appendix D, Service Concession Arrangements of Ind AS 115, Revenue from Contracts with Customer;<\/span><\/p>\n

(d) Licenses of intellectual property granted by a lessor within the scope of Ind AS 115, Revenue from Contracts with Customers; and<\/span><\/p>\n

(e) Rights held by a lessee under licensing agreements within the scope of Ind AS 38, Intangible Assets for such items as motion picture films, video recordings, plays, manuscripts, patents and copyrights.<\/span><\/p>\n

 <\/p>\n

In this topic, We are going to explain some key differences between AS-19 & Ind AS 116: –<\/b><\/p>\n

 <\/p>\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n
Particulars<\/b><\/td>\nIND AS 116<\/b><\/td>\nAS 19<\/b><\/td>\n<\/tr>\n
Applicability to land & building<\/b><\/td>\nSpecific provisions dealing with leases of land and building exists in\u00a0<\/span>Ind AS 116<\/span><\/td>\nNot applicable to lease of lands<\/span><\/td>\n<\/tr>\n
Residual Value<\/b><\/td>\nNo definition of \u201cResidual Value\u201d<\/span><\/td>\nThe term \u201cResidual Value\u201d is defined<\/span><\/td>\n<\/tr>\n
Inception & commencement of lease<\/b><\/td>\nInception of lease and commencement of lease are different as per Ind AS 116<\/span><\/td>\nBoth the terms are used at some places in AS 19, and these terms are not defined and distinguished<\/span><\/td>\n<\/tr>\n
Recognition date<\/b><\/td>\nLease recognized as finance leases as assets and liabilities in balance sheet at the commencement of the <\/span>lease term<\/span><\/td>\nRecognition is at the inception of the lease<\/span><\/td>\n<\/tr>\n
Lease payments<\/b><\/td>\nLease payments made during the period between inception of the lease and the commencement of the lease term is adjusted<\/span><\/td>\nNo such adjustments as per AS 19<\/span><\/td>\n<\/tr>\n
Measurement principles<\/b><\/td>\nMeasurement aspects of investment properties (Ind AS 40) and biological assets (Ind AS 41) are dealt with separately. If such assets are provided or held under a lease agreement, then the measurement principles as per Ind AS 116 will not apply<\/span><\/td>\nAS 19 does not contain such provisions<\/span><\/td>\n<\/tr>\n
Upward revision of unguaranteed residual value<\/b><\/td>\nUpward revision of unguaranteed residual value, during the term of the lease is permitted by the standard<\/span><\/td>\nAS 19 prohibits upward revision of unguaranteed residual value, during the term of the lease<\/span><\/td>\n<\/tr>\n
Treatment of excess of sale proceeds over the carrying value of the asset in sale and leaseback transaction<\/b><\/td>\nThe seller-lessee should measure the\u00a0<\/span>right-of-use asset<\/span>\u00a0arising from the leaseback based on the previous carrying amount. Any gain or loss relating to the rights transferred to the buyer-lessor should be recognised in the profit and loss account<\/span><\/td>\nIn case of a sale and leaseback transaction (in case of\u00a0<\/span>finance lease<\/span>), the excess of sale proceeds, over the carrying amount of the asset, to be deferred and amortised by the seller(lessee) over the tenure of lease, in proportion to depreciation of the leased asset.<\/span><\/td>\n<\/tr>\n
Classification of lease liabilities<\/b><\/td>\nLease liabilities are classified as current\/non-current. It also makes reference to Ind AS 105 on \u201cNon-current Assets Held for Sale and Discontinued Operations\u201c<\/span><\/td>\nThese matters are not addressed in AS 19<\/span><\/td>\n<\/tr>\n
Expected inflationary costs<\/b><\/td>\nFor operating lease, if escalation of lease rentals is attributable to the expected general inflation to compensate the lessor for expected inflationary costs, such costs shall not be straight lined<\/span><\/td>\nAS 19 does not provide for the same<\/span><\/td>\n<\/tr>\n
Treatment of initial direct costs by lessor<\/b><\/td>\nInitial direct costs, incurred by the lessor in case of operating lease, should be included in the carrying amount of leased asset and amortised as an expense, over the lease period<\/span><\/td>\nInitial direct costs, incurred by the lessor in case of operating lease, should be either charged off, at the time of incurrence or should be amortised over the lease period<\/span><\/td>\n<\/tr>\n
Disclosures<\/b><\/td>\nDisclosures are more as compare to AS 19<\/span><\/td>\nFewer disclosures as compared to\u00a0<\/span>Ind AS 116<\/span><\/td>\n<\/tr>\n
<\/td>\n<\/td>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

You might also be interested in : Financial Consultancy Firm in India<\/a> | Top Audit Firms in India<\/a> | GST Consulting Services<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Brief about Ind AS 116: Ind AS 116 sets out the principles for the recognition, measurement, presentation and disclosure of leases and faithful representation of the transactions by lessees and lessors. This information gives a basis for users of financial statements to assess the effect that leases have on the financial position, financial performance and cash flows of an entity. […]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":"","_links_to":"","_links_to_target":""},"categories":[14],"tags":[327,328,330,329],"class_list":["post-1644","post","type-post","status-publish","format-standard","hentry","category-general","tag-ind-as-38","tag-motion-picture-films","tag-service-concession","tag-video-recordings"],"yoast_head":"\nKey Differences Between IND AS 116 and AS 19 | RNM India<\/title>\n<meta name=\"description\" content=\"Learn about the key differences between IND AS 116 and AS 19. 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