Low-value asset exemption
An election to keep leases off the balance sheet where the underlying asset has a low value when new.
Definition
IFRS 16 permits lessees to elect not to recognise a lease asset and liability for leases of assets that are of low value when new. The IFRS 16 basis for conclusions refers to approximately USD 5,000 as a guide. FRS 102 does not prescribe a specific threshold but allows a similar approach. Unlike the short-term exemption, this election is made on a lease-by-lease basis.
Why it matters
The low-value exemption is typically applied to items such as laptops, phones, and small office equipment. There is no prescribed threshold in IFRS 16 itself; entities must set a documented policy for what constitutes low value.
In AuditLease
AuditLease allows the low-value exemption to be recorded per lease. Exempted leases are excluded from the balance sheet calculations but included in the disclosure of low-value lease expense.
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.