Low-Value Exemption (IFRS 16)
Category
IFRS 16
The IFRS 16 low-value lease exemption allows lessees to expense leases of low-value underlying assets instead of recognizing them on the balance sheet. The IASB indicated a threshold of approximately USD 5,000 when the asset is new. Unlike the short-term exemption, the low-value exemption is applied on a lease-by-lease basis.
Why it matters
The low-value exemption is unique to IFRS 16. ASC 842 has no equivalent. It captures items like tablets, phones, office furniture, and small equipment. The assessment is based on the value of the asset when new, regardless of age at lease commencement. Subleased assets do not qualify. The exemption applies per-lease (not per-class), giving organizations flexibility to capitalize some low-value leases while expensing others.
How Arvexi handles this
Arvexi identifies leases that qualify for the low-value exemption based on the underlying asset's new value. The platform tracks exempt leases for disclosure purposes and calculates the total expense from low-value leases, a required IFRS 16 disclosure line item.