Dr. Antony Michail
Nov 6, 2018

IFRS 16, the new leases standard, and its expected effect on lessee financial reporting

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First Published: IFRS Boutique

Date: October 2017

By: Chris Ragkavas, BA, MA, FCCA, CGMA

StudySmart management consultant, senior finance & accounting tutor, IFRS technical expert.

 

 

IASB and FASB have been considering for quite some time the lack of complete information with regards to long-term, in-substance unavoidable liabilities that most entities are committed to. Specifically, liabilities related to properties they lease

 

The new accounting standard IFRS 16 Leases, which is applicable for financial reporting periods beginning on, or after 1/1/2019, sets the record straight in that respect, as it obliges entities to recognize these liabilities, as opposed to the existing standard IAS 17 Leases, where a mere reference to operating lease liabilities was required, in the notes to the financial statements.

 

The application of the standard will result into a material increase in long-term liabilities for almost all entities.

 

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