![]() ![]() ![]() ![]() This means that if a company has control over, or right to use, an asset they are renting, it is classified as a lease for accounting purposes and, under the new rules, must be recognised on the company’s balance sheet. IFRS 16 takes a totally new approach to accounting for leases, called the ‘right-of-use’ model. Since its introduction on 1 January 2019, this new standard will affect most companies reporting under IFRS and will have a major impact on the financial statements of lessees of property and high-value equipment. IFRS 16 is the most significant change to lease accounting in over 30 years. Here we try to make it easier for you to understand the pros, cons, and implications of IFRS 16 for your business accounting and even come up with a suggestion or two to make it simpler still. On closer examination, however, it’s fairly straightforward to understand, but could be less so to implement. It replaced the existing IAS 17 accounting standard and was introduced by the International Accounting Standards Board (IASB).Īt first glance, it’s a complicated piece of accounting legislation which could potentially be difficult to navigate. IFRS 16 is a new International Financial Reporting Standard for lease accounting which came into force on 1 January 2019. ![]()
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