Lease Accounting as per IFRS 16 vs. AS 19

Sl. No.	Topic	Ind AS 116	AS 19
1	Applicability to land & building	Specific provisions dealing with leases of land and building exists in Ind AS 116	Not applicable to lease of lands
2	Residual Value	No definition of “Residual Value”	The term “Residual Value” is defined
3	Inception & commencement of lease	Inception of lease and commencement of lease are different as per Ind AS 116	Both the terms are used at some places in AS 19, and these terms are not defined and distinguished
4	Recognition date	Lease recognised as finance leases as assets and liabilities in balance sheet at the commencement of the lease term	Recognition is at the inception of the lease
5	Lease payments	Lease payments made during the period between inception of the lease and the commencement of the lease term is adjusted	No such adjustments as per AS 19
6	Measurement principles	Measurement 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	AS 19 does not contain such provisions
7	Lease evaluation	Provides guidance on accounting for incentives in the case of operating leases, and evaluating the substance of transactions having the legal form of a lease and determining whether such an arrangement contains an element of lease	Does not contain such guidance

Sl. No.	Topic	Ind AS 116	AS 19
8	Upward revision of unguaranteed residual value	Upward revision of unguaranteed residual value, during the term of the lease is permitted by the standard	AS 19 prohibits upward revision of unguaranteed residual value, during the term of the lease
9	Treatment of excess of sale proceeds over the carrying value of the asset in sale and leaseback transaction	The seller-lessee should measure the right-of-use asset arising 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	In case of a sale and leaseback transaction (in case of finance lease), 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.
10	Classification of lease liabilities	Lease liabilities are classified as current/non-current. It also makes reference to Ind AS 105 on “Non-current Assets Held for Sale and Discontinued Operations“	These matters are not addressed in AS 19
11	Expected inflationary costs	For 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	AS 19 does not provide for the same
12	Treatment of initial direct costs by lessor	Initial 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	Initial 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
13	Disclosures	Disclosures are more as compare to AS 19	Fewer disclosures as compared to Ind AS 116