ÖBB Annual Report 2023

241 Consolidated Financial Statements Österreichische Bundesbahnen-Holding Aktiengesellschaft Consolidated Financial Statements | Group Management Report 23 Leases Lessee At the inception of the contract, the ÖBB Group assesses whether the contract constitutes or contains a lease. This is the case when the contract conveys the right to control the use of an identified asset for a specified period of time, in return for a fee. In order to assess whether a contract contains the right to control an identified asset, the ÖBB Group uses the definition of a lease in accordance with IFRS 16. On the commencement date, the Group records an asset for the right of use granted and a lease liability. The right of use is initially measured at cost, which is equal to the initial measurement of the lease liability, adjusted for payments made on or before the commencement date, plus any initial direct costs and the estimated costs of dismantling or removing the underlying asset or the site on which it is located, less any incentives received under the lease. Subsequently, the right of use is amortised on a straight-line basis from the commencement date to the end of the lease term unless ownership of the underlying asset is transferred to the ÖBB Group at the end of the lease term or the cost of the right of use reflects the fact that the ÖBB Group will exercise a purchase option. In that case, the right of use is amortised over the useful life of the underlying asset, which is determined in accordance with the rules for property, plant and equipment. In addition, the right of use is continuously adjusted for impairment where necessary and adjusted for certain remeasurements of the lease liability. For the first time, the lease liability is discounted at the present value of the lease payments not yet made at the inception of the lease, using the interest rate applicable to the lease or, if this interest rate cannot be readily determined, using the ÖBB Group’s incremental borrowing rate. The lease payments included in the measurement of the lease liability comprise: – fixed payments, including de facto fixed payments; – variable lease payments linked to an index or (interest) rate, initially measured on the basis of the index or rate applicable on the commencement date or (interest) rate; – amounts expected to be paid under a guaranteed residual value; and – the exercise price of a call or renewal option if the ÖBB Group is reasonably certain to exercise it, and penalties for early termination of the lease unless the ÖBB Group is reasonably certain it will not terminate the lease prematurely. The lease liability is measured at the amortised carrying amount using the effective interest method. It is remeasured if future lease payments change due to a change in an index or (interest) rate, if the ÖBB Group adjusts its estimate of the expected payments from a guaranteed residual value, if the ÖBB Group changes its estimation regarding the exercise of a purchase, extension or termination option, or if a de facto fixed lease liability changes. If the lease liability is remeasured in this way, the carrying amount of the right of use is adjusted accordingly or, if the carrying amount of the right of use has been reduced to zero, the adjustment is recognised in profit or loss. In the Statement of Financial Position, the ÖBB Group reports rights of use that do not meet the definition of an investment property under property, plant and equipment, and lease liabilities under financial liabilities. Information on the accounting policies for cross-border leasing transactions is provided in Note 30.3. Short-term leases and leases based on low-value assets The ÖBB Group has made use of the relief not to recognise rights of use and lease liabilities for leases based on assets of low value (up to EUR 5,000.00), short-term leases and intangible assets. The ÖBB Group recognises the lease payments associated with these leases as an expense on a straight-line basis over the term of the lease.