In depth - IFRS 16 - a new era of lease accounting!

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Mar 2016

In January 2016 the International Accounting Standards Board (IASB) issued IFRS 16, 'Leases', and thereby started a new era of lease accounting - at least for lessees. Whereas, under the previous guidance in IAS 17, 'Leases', a lessee had to make a distinction between a finance lease (on balance sheet) and an operating lease (off balance sheet), the new model requires the lessee to recognise almost all lease contracts on the balance sheet; the only optional exemptions are for certain short-term leases and leases of low-value assets. For lessees that have entered into contracts classified as operating leases under IAS 17, this could have a huge impact on the financial statements.

This In Depth provides a summary of IFRS 16 and the main differences between IFRS 16 and the expected new guidance in US GAAP are included in the Appendix.

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