IASB issues IFRS 16 – Leases
The new Standard provides a comprehensive model for the identification of lease arrangements and their treatment in the financial statements of both lessees and lessors. It supersedes IAS 17 Leases and its associated interpretative guidance.
IFRS 16 applies a control model to the identification of leases, distinguishing between leases and service contracts on the basis of whether there is an identified asset controlled by the customer.
Significant changes to lessee accounting are introduced, with the distinction between operating and finance leases removed and assets and liabilities recognised in respect of all leases (subject to limited exceptions for short-term leases and leases of low value assets).
In contrast, the Standard does not include significant changes to the requirements for accounting by lessors.
Entities will need to consider the impact of the changes introduced by the Standard on, for example, IT systems and internal controls.
The Standard is effective for annual periods beginning on or after1 January 2019 with earlier application permitted for entities that have also adopted IFRS 15 Revenue from Contracts with Customers.