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ifrs 16 requires less ease to capitalize all leases that means if youre a lessee and youre renting something you have to recognize that thing as an asset on your statement of financial position and you have to recognize the present value of the expected lease payments as a lease liability on your statement of financial position unless you meet one of two exceptions so the first exception is if its a short term lease and by short term i mean that the lease term is 12 months or less so lets say youre renting a piece of equipment for just six months in that case you meet the exception okay now if its a lease of a low value asset meaning that the fair market value of the thing that youre renting is five thousand dollars or less at the beginning of the lease so lets say for example youre renting a truck and at the beginning of the lease you say wow the fair market value of this truck is just two thousand dollars then you can meet the exception now if you meet one of one or both of
