IFRS Standard on Leases Becomes Effective from January 2019
IFRS 16, the IFRS standard on leases was issued in January 2016 and became effective for annual reporting periods starting on or after January 01, 2019. IFRS 16 replaces the standard IAS 17 on leases, along with the related Interpretations.
IFRS 16 changes the accounting substantially for lessees. The new standard eliminates a lessee’s classification of leases as either operating leases or finance leases. Instead, as per the new standard, almost all leases are "capitalized" by recognizing a lease liability and right-of-use asset on the balance sheet. There is little change for lessors. IFRS 16 will increase visibility of companies’ lease commitments and better reflect economic reality. The standard will also make it easier for users of financial statements to compare companies that lease their assets with companies that borrow money to buy their assets, creating a more level playing field.
Effective Date: January 01, 2019
Keywords: International, Accounting, Banking, IFRS 16, Leases, Operating Lease, Finance Lease, IFRS
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