Highlights
IFRS 16 Leases has now been successfully adopted by companies reporting under IFRS® Accounting Standards. It is the new normal, driving consistency in lease accounting around the world – but challenges remain.
When first published, IFRS 16’s ‘on-balance sheet’ approach had a significant impact on the financial statements of lessees with ‘big-ticket’ leases, from retailers to banks to media companies. Similarly, lessors were faced with new guidance on a number of aspects, from separating lease and non-lease components to more radical accounting changes for more complex arrangements such as sale-and-leaseback transactions and sub-leases.
Application issues
Some years on from adoption of the standard, many of its original implementation challenges continue to raise application issues. These include deciding whether a transaction is, or contains, a lease and determining whether particular lease payments are fixed or variable in nature. Meanwhile, adopting new processes or new technologies (e.g. those relating to renewable energy and AI) are creating new challenges for companies.
Find out more
Our IFRS 16 – An overview publication provides an overview of IFRS 16’s accounting models for lessees and lessors. It then takes a deeper dive into critical areas such as the definition of a lease and accounting for lease modifications.
It includes examples and insights to help you understand the requirements and their impacts on your financial statements. If you are looking for a practical overview of IFRS 16, or just a refresher, you’ve come to the right place.
Visit our Leases hot topic page for more insight on lease accounting under IFRS Accounting Standards. We also have in-depth guides on specific topics, which make up our handbook on accounting for leases under IFRS Accounting Standards.
For further information on financial reporting in these uncertain times, see our Uncertain times digital hub.
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