CANCELABLE LEASES

A lessee may elect not to apply IFRS 16 for short-term leases [16.5 (a)]. An entity shall determine the lease term as the non-cancelable period of a lease [16.18]. Therefore, if a lease is cancelable, it becomes a short term lease. A lease that, at the commencement date, has a lease term of 12 months or less is short term. A cancelable lease is one where an entity enters into a lease contract that does not specify a particular contractual term and continues indefinitely until either party gives notice to terminate. In this case an entity shall recognize the lease payments associated with the leases as an expense in the accounting period the lease payments are made.