SK TELECOM CO., LTD.
Notes to the Separate Financial Statements
For the years ended
December 31, 2018 and 2017
4.
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Significant Accounting Policies, Continued
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(27)
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Standards issued but not yet effective, Continued
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K-IFRS
No. 1116
Leases
K-IFRS
No. 1116, published on May 22, 2017 is effective for annual periods beginning on or
after January 1, 2019, with early adoption permitted.
K-IFRS
No. 1116, replaces existing leases guidance including
K-IFRS
No. 1017,
Leases
,
K-IFRS
No. 2104,
Determining whether an Arrangement contains a Lease
,
K-IFRS
No. 2015,
Operating Leases - Incentives
and
K-IFRS
No. 2027,
Evaluating the Substance of Transactions Involving the Legal Form of a Lease.
The Company will assess at inception of a contract whether that contract is, or contains, a lease. A contract is, or contains, a lease if the
contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. However, the Company can apply a practical expedient to grandfather their previous assessment of whether existing contracts are,
or contain, leases.
A lessee recognizes a
right-of-use
asset representing its right to use the underlying assets and a lease liability representing its obligation to make lease payments. There are recognition exemptions for short-term leases (lease term ends within 12 months at the commencement date of
the lease) or leases of
low-value
items (assets with a value of KRW 6 million or less). As a practical expedient, a lessee can elect, by class of underlying asset, not to separate lease components from
any associated
non-lease
components. A lessee that takes this election accounts for the lease component and the associated
non-lease
components as a single lease
component.
A lessors accounting remains similar to current requirements,
K-IFRS
No. 1017
Leases
.
|
1)
|
A lessees accounting - application and financial impacts
|
A lessee is permitted to adopt the standard retrospectively according to
K-IFRS
No. 1008,
Accounting Policies, Changes in Accounting Estimates and Errors,
(Full retrospective approach) or to follow a modified retrospective approach in which the lessee recognizes the cumulative effect of initial application of the
standard as an adjustment to equity at the date of initial application. (Modified retrospective approach)
The Company plans to
apply
K-IFRS
No.1116 initially on January 1, 2019 by using the modified retrospective approach. Therefore, the cumulative effect of adopting
K-IFRS
No.1116 will be
recognized as an adjustment to the opening balance of retained earnings at January 1, 2019 with no restatement of comparative information.
The Company is assessing the financial impact of the adoption of
K-IFRS
No. 1116 on its saperate
financial statement. It is impractical to provide a reasonable estimate of the financial impact until the Company completes this analysis.
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