The new Standard will affect most companies that report under IFRS and are involved in leasing, and will have a substantial impact on the financial statements of lessees of property and high value equipment.
Since accounting for leases under IFRS 16 results in substantially all leases being recognised on a lessee’s balance sheet, the evaluation of whether a contract is (or contains) a lease becomes even more important than it is under IAS 17 and IFRIC 4. In practice, the main impact will be on contracts that are not in the legal form of a lease but involve the use of a specific asset and therefore might contain a lease – such as outsourcing, contract manufacturing, transportation and power supply agreements. Currently, this evaluation is based on IFRIC 4; however, IFRS 16 replaces IFRIC 4 with new guidance that differs in some important respects.
IFRS 16 changes the definition of a lease and provides guidance on how to apply this new definition. As a result, some contracts that do not contain a lease today will meet the definition of a lease under IFRS 16, and vice versa.
IFRS 16 represents the first major overhaul of lease accounting in over 30 years.
Subscribe to receive relevant and timely information and event invitations.
This website uses cookies to provide necessary site functionality, monitor performance, give you access to products and services that are most relevant to you, and improve the online user experience. For further information about how we use cookies, please visit our Privacy Statement. For information on how to adjust your cookie preferences including how to delete cookies, please consult your browser’s “Help” function.
