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The Financial Reporting Faculty IFRS 16 Leases tracker

The standards tracker is a unique tool which allows faculty members to identify quickly and easily the version of a standard which is applicable to a particular accounting period.

Published January 2016. Effective 1 January 2019*

*Not EU endorsed as at 7 June 2017. Read more on EU Endorsement.

 Read the Financial Reporting Faculty's FAQ document on IFRS 16 Leases

Contents

IFRS 16 Leases: Putting theory into practice

Views of leading experts to help you plan for the change that lies ahead.

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Financial Reporting Faculty members only

*UK qualifying parents and subsidiaries can take advantage of FRS 101 Reduced Disclosure Framework. Find out more on which entities qualify and the criteria to be met. 

How standards trackers work

Financial Reporting Faculty members get full access. Login to get the version of the standard relevant to specific time periods via eIFRS.

ICAEW members and non-members can view a brief synopsis, amendments and details of current proposals.

Synopsis

IFRS 16 replaces IAS 17. It provides a single lessee accounting model to be applied to all leases, whilst retaining a two model approach for lessors.

Lessees recognise a right-of-use asset and a lease liability on the commencement of a lease. 

  • The asset is initially recognised at the amount of the lease liability plus initial direct costs; it is subsequently measured using the cost model unless the underlying asset is investment property measured at fair value or PPE measured under the revaluation model.
  • The liability is initially measured at the present value of the lease payments over the lease term, discounted at the rate implicit in the lease.

An election can be made on a lease-by-lease basis to apply alternative accounting treatment to leases with a term of less than 12 months and leases for low value assets. In this case lease payments are recognised as an expense on a straight-line basis, or another systematic basis, over the lease term.

Lessors classify leases as either operating or finance leases:

  • Operating lease income is recognised on a straight line basis over the lease term; the underlying asset is presented in the statement of financial position (balance sheet).
  • Finance lease income is recognised over the period of the lease to reflect a constant periodic rate of return; the underlying asset is derecognised and a receivable recognised instead, measured initially at the net investment in the lease.

Which version of the standard?

'Which version of the standard?' is only available to members of the Financial Reporting Faculty. Please note that to access electronic versions of IFRS through the links in these standard trackers you need to have first logged into eIFRS.