In the lessee's SPL, how are the interest expenses on the lease liability shown relative to depreciation?

• A. They are presented as a single line with depreciation
• B. They are presented separately from depreciation
• C. They are included in depreciation
• D. They are not shown

Answer: (B)

Under IFRS 16, a lessee recognises both a lease liability and a right‑of‑use asset. In the profit or loss, the interest on the lease liability is shown as a separate finance cost, while the depreciation of the right‑of‑use asset is shown as depreciation expense. They are presented separately to reflect the financing cost versus the consumption of the asset, so the interest and the depreciation don’t get lumped together. This makes it clear what part of the expense comes from financing the lease and what part comes from using up the asset.