Ask the Expert: IFRS 16 Leases

A company have entered into a 10-year agreement with the owner of the carpark they operate to pay 10% of all revenue generated by the car park back to the owner (payments due at the end of each month).  In return the company is free to set the pricing for the car park, incurs all operating costs (including insuring for public liability) and bears the credit risk for collecting parking fees (i.e. no agency relationship exists).

David Holland, National Head of Technical Accounting looks at the impact of the AASB/IFRS 16 leases standards on car park operation transactions.