UNITY BANK LIMITED 2022 Financial Report
ABN 11 087 650 315
UNITY BANK LIMITED 2022 Financial Report
ABN 11 087 650 315
Bank as lessee Contracts may contain both lease and non-lease components. At the commencement or modification of a contract that contains a lease component, the company allocates the consideration in the contract to each lease component on the basis of its relative stand-alone prices. However, for leases of property, the Bank has elected not to separate lease and non-lease components and instead accounts for these as a single lease component. The Bank recognises a right-of-use asset and a lease liability at the lease commencement date. The right- of-use asset is initially measured at cost comprising, the amount of the initial measurement of lease liability; adjusted for any lease payments made at or before the commencement date less any lease incentives received; plus any initial direct costs; and an estimate of the costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located. The right-of-use asset is subsequently depreciated over the shorter of the asset's useful life and the lease term on a straight-line basis, unless the lease transfers ownership of the underlying asset to the Bank at the end of the lease term or the company is reasonably certain to exercise a purchase option. In that case, the right-of- use asset is depreciated over the underlying asset’s useful life, which is determined on the same basis as those of property, plant and equipment. In addition, the right of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain re-measurements of the lease liability. The lease liability is initially measured at present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease. If that rate cannot be readily determined the Bank’s incremental borrowing rate is used, being the rate that the Bank would have to pay to borrow the funds necessary to obtain an asset of similar value to the right-of-use asset in a similar economic environment with similar terms, security and conditions. Lease payments included in the measurement of the lease liability comprise: • fixed payments (including in-substance fixed payments), less any lease incentives receivable • variable lease payments that are based 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 Bank under residual value guarantees • the exercise price of a purchase option if the Bank is reasonably certain to exercise that option; and • payments of penalties for terminating the lease unless the Bank is reasonably certain not to terminate the lease early. Lease payments are allocated between principal and finance cost. The finance cost is charged to profit or loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. The lease liability is measured at amortised cost using the effective interest rate method. It is re-measured when: • there is a change in future lease payments arising from a change in an index or rate • if there is a change in the estimate of the amount expected to be payable under a residual value guarantee • if there is a change in the Bank ’s assessment of whether it will exercise a purchase, extension or termination option: or • if there is a revised in-substance fixed lease payment. When the lease liability is re-measured in this way, a corresponding adjustment is made to the carrying value of the right-of – use asset, unless the right-of-use asset has been reduced to zero in which case the adjustment is recorded in profit or loss.
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