Investor Presentaiton
Department of Health
Notes to the financial statements
For the year ended on 30 June 2023
7.2
Lease liabilities
Contents
Current
Non-current
Total lease liabilities at end of period
Initial measurement
2023
2022
$'000
$'000
621
510
2,133
1,807
2,754
2,317
At the commencement date of the lease, the department recognises lease liabilities measured at the present value of lease payments to be made over the lease term. The
lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be readily determined, the department uses the incremental borrowing rate
provided by Western Australia Treasury Corporation.
Lease payments included by the department as part of the present value calculation of lease liability include:
.
fixed payments (including in-substance fixed payments), less any lease incentives receivable
variable lease payments that depend on an index or a rate initially measured using the index or rate as at the commencement date
•
.
amounts expected to be payable by the lessee under residual value guarantees
the exercise price of purchase options (where these are reasonably certain to be exercised)
payments for penalties for terminating a lease, where the lease term reflects the department exercising an option to terminate the lease.
The interest on the lease liability is recognised in profit or loss over the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability
for each period. Lease liabilities do not include any future changes in variable lease payments (that depend on an index or rate) until they take effect, in which case the lease
liability is reassessed and adjusted against the right-of-use asset.
Periods covered by extension or termination options are only included in the lease term by the department if the lease is reasonably certain to be extended (or not terminated).
Variable lease payments, not included in the measurement of lease liability, that are dependent on sales are recognised by the department in profit or loss in the period in which
the condition that triggers those payments occur.
This section should be read in conjunction with note 5.3 'Right-of-use assets'.
Subsequent measurement
Lease liabilities are measured by increasing the carrying amount to reflect interest on the lease liabilities; reducing the carrying amount to reflect the lease payments made;
and remeasuring the carrying amount at amortised cost, subject to adjustments to reflect any reassessment or lease modifications.
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