Page 37 University of Technology, Jamaica Notes to the Financial Statements 31 March 2020 (expressed in Jamaican dollars unless otherwise indicated) 12. Right of use Asset/Leases (Continued) (a) Amounts recognised in the statement of statement of comprehensive income The statement of comprehensive income shows the following amounts relating to right-of-use assets: 31 March 2020 $’000 31 March 2019 $’000 Depreciation charge for right-of-use Building 7,027 - Interest expense (included in finance cost) 7,712 - Total expenses related to leases 14,739 - The total outflow for leases in 2019 was $13,639,000. Adoption of New Accounting Standard This note explains the impact of the adoption of IFRS 16 Leases on the company’s financial statements. As indicated in Note 2, the company has adopted IFRS 16 Leases retrospectively from 31 March 2019 but has not restated comparatives for the 2019 reporting period, as permitted under the specific transition provisions in the standard. The reclassifications and the adjustments arising from the new leasing rules are therefore recognised in the opening statement of financial position on 31 March 2019. The new accounting policies are disclosed in Note 2(r). On adoption of IFRS 16, the company recognised lease liabilities in relation to leases which had previously been classified as ‘operating leases’ under the principles of IAS 17 Leases. These liabilities were measured at the present value of the remaining lease payments, discounted using the lessee’s incremental borrowing rate as of 31 March 2019. The weighted average lessee’s incremental borrowing rate applied to the lease liabilities was between 8.00%. (a) Practical expedients applied In applying IFRS 16 for the first time, the company has used the following practical expedients permitted by the standard: (i) applying a single discount rate to a portfolio of leases with reasonably similar characteristics; (ii) relying on previous assessments on whether leases are onerous as an alternative to performing an impairment review – there were no onerous contracts as at 31 March 2019; (iii) accounting for operating leases with a remaining lease term of less than 12 months as at 31 March 2019 as short-term leases; (iv) excluding initial direct costs for the measurement of the right-of-use asset at the date of initial application, and; (v) using hindsight in determining the lease term where the contract contains options to extend or terminate the lease. The University has also elected not to reassess whether a contract is or contains a lease at the date of initial application. Instead, for contracts entered into before the transition date the company relied on its assessment made applying IAS 17 and IFRIC 4 - Determining whether an arrangement contains a lease. University of Technology, Jamaica 153
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