IFRS 16 new leases standard – impacts processes of lessees around the globe.
There are new International Financial Reporting Standards that take effect from accounting periods beginning on or after 1 January 2019. The new leases standard – IFRS 16 – will require companies to bring most leases on-balance sheet from 2019.
In short, the standard requires any company that reports under IFRS to account for leases on their balance sheet, by recognising the right-of-use of the asset and lease liability. Analysts concur that this will have a particularly significant impact on financial statements of lessees where property and high value equipment are concerned.
Impact on leases:
- All leases will be accounted for on balance sheet as opposed to simply expensing periodically.
- Leases for right-of-use assets will in effect be treated similarly to a purchased asset and depreciated/amortised.