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CA Final · Financial Reporting · Ind AS 116 Leases

Kaveri Logistics Ltd. is a lessor and leases out heavy trucks under arrangements classified as operating leases. The CFO asks which disclosure requirements apply to the trucks as underlying assets held by Kaveri. Under Ind AS 116, what should Kaveri apply for these assets?

The lessor applies the disclosure requirements of Ind AS 36, Ind AS 38, Ind AS 40 and Ind AS 41 for assets subject to operating leases. Ind AS 116 expressly lists these four standards for such assets, so Kaveri's trucks are covered by them.

  1. AOnly the disclosures in Ind AS 116 for finance leases
  2. BThe disclosure requirements in Ind AS 36, Ind AS 38, Ind AS 40 and Ind AS 41Correct
  3. CNo asset-specific disclosures, since the lease is off-balance sheet for the lessee
  4. DOnly the disclosure requirements of Ind AS 16 and Ind AS 2

Explanation

Ind AS 116 states that a lessor applies the disclosure requirements in Ind AS 36, Ind AS 38, Ind AS 40 and Ind AS 41 for assets subject to operating leases. The Ind AS 16/Ind AS 2 option does not match the wording of the paragraph. The finance lease option is wrong because these are operating leases.

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