Short-term and low-value exemptions

IFRS 16.5–6 allows lessees to elect not to capitalise:

• Short-term leases — non-cancellable term (including all options reasonably certain to be exercised) ≤ 12 months. Election is per asset class.
• Low-value leases — underlying asset value when new is ≤ ~USD 5,000 (e.g. office equipment, tablets, small fittings). Election is per lease.

Either election turns into a straight-line expense in P&L (Dr. Lease expense / Cr. Bank) over the lease term — no RoU asset, no lease liability, no schedule.

The policy schema

LeasePortfolioExemption declares the customer's elections at portfolio level:

Field	Purpose
policyEffectiveDate	When the policy applies from.
shortTermByClass	Per-asset-class boolean — which classes the short-term exemption is elected for.
lowValueThresholdCents	Tenant's low-value threshold in cents (default ≈ USD 5,000 equivalent).
lowValueByClass	Per-asset-class boolean.
approver / policyDocument	Approver person id + docudesk policy PDF FK.
supersededBy	Self-FK so a policy revision keeps the historical record.

How a lease is classified

When the operator picks one of the four classification enum values on a LeaseContract:

• IFRS16-capitalised → full RoU + liability + schedule.
• short-term-exempt → straight-line expense, no schedule, no fixed-asset record.
• low-value-exempt → same as short-term-exempt, but expense lands in the low-value account subtype.
• operating-pre-IFRS16 → grandfathered for pre-transition records (audit-trail only).

The LeaseContractGuard enforces the enum membership at draft → active (REQ-LC-004); a misclassified or incomplete lease never activates.

Disclosure impact

LeaseDisclosureService::aggregateFromLeases walks every exempt lease and adds its base payment × schedule length to:

• totalShortTermLeaseExpense (REQ-LE-003)
• totalLowValueLeaseExpense

These figures land in the disclosure table CSV alongside the IFRS 16-capitalised totals so the auditor sees the full expense picture in one row.

Setup recipe

1. Define the policy. Create a LeasePortfolioExemption record with the elections, threshold, approver, and effective date. Attach the board / CFO sign-off PDF as policyDocument (docudesk FK).
2. Apply to existing leases. Review the lease register, classify each pre-existing lease per the policy. The classification engine validates the choice against the asset class and term.
3. Maintain. When the policy changes, create a new LeasePortfolioExemption and set its supersededBy on the prior one. Auditors can walk the policy history.

Common patterns

Asset class	Short-term elected?	Low-value elected?
Vehicle	No (typical term 36–60 mo)	No
Real estate	No (typical term 60–120 mo)	No
IT hardware (laptops)	Yes (12-month refresh cycle)	Yes
Office equipment	No	Yes
Machinery	No	Depends on per-unit value