(paragraphs 3-4)

BC75 Information about assets that are not essential to the operations of an entity is sometimes of less interest to users of financial statements, because those assets are often less significant to the entity. Accordingly, some think that the costs associated with recognising and measuring the assets and liabilities arising from leases of non-core assets could outweigh the benefits to users. For example, information about assets and liabilities arising from leases of delivery vans is important to assess the operations of a delivery company, but it may not be important for materiality reasons in assessing the operations of a bank that uses vans to deliver supplies to its retail banking locations. Consequently, the IASB considered whether to exclude leases of non-core assets from IFRS 16.

BC76 Although some Board members favoured such an approach, the IASB noted that:

(a) defining ‘core’ and ‘non-core’ would be extremely difficult. For example, would office buildings used by a bank be a core asset, and would the conclusion be different if the bank has retail banking operations? Would an entity consider some offices or cars to be core assets and others non-core? If core assets were defined as those essential to the operations of an entity, it could be argued that every lease would be a lease of a core asset. Otherwise, why would an entity enter into the lease?

(b) different entities might interpret the meaning of non-core assets differently, thereby reducing comparability for users of financial statements.