Substantially all economic benefits
The customer's right to obtain substantially all of the economic output and other benefits from using an identified asset during the lease term.
Definition
This is one of two tests used to assess whether a customer controls the use of an asset under IFRS 16 and amended FRS 102. Economic benefits include the primary output of the asset, by-products, and other economic benefits that could be realised from commercial use of the asset. Where the customer only benefits from using the asset in a narrow or restricted way, this test may not be met.
Why it matters
This test helps distinguish leases from service arrangements where the supplier retains most of the economic upside. Failing this test means the contract is less likely to be a lease.
In AuditLease
Useful for documenting the lease identification assessment and supporting audit evidence within AuditLease.
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.