Accounting judgement
A professional assessment made by management where the accounting outcome is not determined by objective fact alone.
Definition
Accounting judgements are decisions that require professional expertise and the application of accounting policy in uncertain or subjective situations. Under IFRS 16 and FRS 102, key lease accounting judgements include: lease term determination, renewal and termination option assessments, discount rate selection, and low-value threshold setting.
Why it matters
Accounting judgements must be documented, disclosed in the statutory accounts notes, and able to withstand audit scrutiny. Poorly documented judgements are a common audit finding in lease accounting.
In AuditLease
AuditLease has a dedicated accounting judgements section for each lease. Judgements are stored per lease, and for each judgement type the statutory note counts the leases with a recorded rationale and shows one representative rationale.
Related terms
Put this into practice with AuditLease
AuditLease handles IFRS 16 and FRS 102 lease calculations, statutory note generation, journal entries, and audit evidence, so your team spends less time on spreadsheets and more time on judgements.
This definition is for general information only and is not accounting or legal advice. Definitions are based on IFRS 16, FRS 102, and associated guidance published by the IFRS Foundation and the Financial Reporting Council. Users should refer to the applicable accounting standards and their professional advisers for judgement-specific matters.