IFRS 16 Leases prescribes a single lessee accounting model that requires the recognition of asset and corresponding liability for all leases with terms over 12 months unless the underlying asset is of low value. Lessors continue to apply a two-model approach.
Published January 2016. Effective 1 January 2019
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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.
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:
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This page was last updated 20 April 2018
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