BARBADOS PUBLIC WORKERS’ CO-OPERATIVE CREDIT UNION LIMITED | NON-CONSOLIDATED ANNUAL REPORT 2020 29 BARBADOS PUBLIC WORKERS' CO-OPERATIVE CREDIT UNION LIMITED Notes to the Non-consolidated Financial Statements For the year ended March 31, 2020 (Expressed in Barbados dollars) 12 2. Accounting Policies, continued (b) New standards, amendments and interpretations mandatory for the first time for the financial year, continued Definition of a lease, continued On transition to IFRS 16, the Credit Union elected to apply the practical expedient to grandfather the assessment of which transactions are leases. The Credit Union applied IFRS 16 only to contracts that were previously identified as leases. As a lessee As a lessee, the Credit Union leases branches and office premises. The Credit Union previously classified these leases as operating leases under IAS 17 based on its assessment of whether the lease transferred substantially all of the risks and rewards incidental to ownership of the underlying asset to the Credit Union. Under IFRS 16, the Credit Union recognises right-of-use assets and lease liabilities for leases of branches and office premises. Further, the Credit Union has not entered into any new leases during the year ended March 31, 2020. At commencement or on modification of a contract that contains a lease component, the Credit Union allocates the consideration in the contract to each lease component on the basis of its relative standalone prices. However, for leases of branches and office premises the Credit Union has elected not to separate non- lease components and account for the lease and associated non-lease components as a single lease component. On transition, for these leases, lease liabilities were measured at the present value of the remaining lease payments, discounted at the Credit Union’s incremental borrowing rate as at April 1, 2019. Right-of-use assets are measured at their carrying amount as if IFRS 16 had been applied since the commencement date, discounted using the Credit Union’s incremental borrowing rate at the date of initial application. The Credit Union used a number of practical expedients when applying IFRS 16 to leases previously classified as operating leases under IAS 17. In particular, the Credit Union: • relied on its assessment of whether leases are onerous under IAS 37 Provisions, Contingent Liabilities and Contingent Assets immediately before the date of initial application as an alternative to performing an impairment review; • did not recognise right-of-use assets and liabilities for leases for which the lease term ends within 12 months of the date of initial application; • did not recognise right-of-use assets and liabilities for leases of low-value assets (i.e. IT equipment); • excluded initial direct costs from measuring the right-of-use asset at the date of initial application; and • used hindsight when determining the lease term.
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