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IFRS 16 Leases

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. The standard was published in January 2016 and is effective from 1 January 2019.

Full text standard

Unaccompanied version of IFRS 16
The International Accounting Standards Board (IASB) provides free access to the consolidated unaccompanied international accounting standards for the current year through its website. Free registration is required.

This unaccompanied version does not include additional content that accompanies the full standard, such as illustrative examples, implementation guidance and bases for conclusions.

IFRS 16 summary and timeline

Looking for the synopsis? Our IFRS 16 summary and timeline are now on a separate page, featuring information on current proposals and a timeline of IASB updates.

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1. Annual Improvements 2018 – 2020 amendments to IFRS 16*

No effective date is stated since the amendment only affects an illustrative example.

Illustrative Example 13 of IFRS 16 is amended to remove the reimbursement of leasehold improvements. This is because the example did not explain clearly enough the conclusion as to whether the reimbursement was a lease incentive.

2a. Covid-19-Related Rent Concessions – amendments to IFRS 16 and 2b Covid-19-Related Rent Concessions beyond 30 June 2021**

Effective from 1 June 2020; earlier adoption is permitted. 

IFRS 16 was originally amended in 2020 for Covid-19-related rent concessions. The amendments provide lessees who have received rent concessions as a direct consequence of the Covid 19 pandemic with an exemption from the requirement to assess whether the concession is a lease modification. The exemption is not mandatory and originally applied only when the Covid 19-related rent concession does not extend beyond 30 June 2021. A further amendment was issued in March 2021 which extends the exemption so that it applies only when the rent concession does not extend beyond 30 June 2022. The extension is effective from 1 April 2021 with earlier application permitted.

3. Interest Rate Benchmark Reform Phase 2 – amendments to IFRS 16

Effective from 1 January 2021; earlier adoption is permitted. 

The amendments introduce a mandatory practical expedient that must be applied by a lessee to account for a lease modification arising solely due to interest rate benchmark reform. In this case the lease liability should be remeasured by discounting the revised lease payments using a revised discount rate that reflects the change in interest rate. If additional modifications are made, that are not the result of interest rate benchmark reform, existing IFRS 16 guidance applies to all modifications including those required due to reform, and the practical expedient is not applied.

*Not UK endorsed as at 23 June 2021. Read more on UK endorsement of IFRS standards. Not EU endorsed as at 23 June 2021. Read more on EU endorsement of IFRS standards.

**UK endorsed but not EU endorsed as at 23 June 2021.

Related IFRIC interpretations

UK reduced disclosures

UK qualifying parents and subsidiaries can take advantage of FRS 101 Reduced Disclosure Framework. Our FRS 101 page gives more information on which entities qualify and the criteria to be met.

Amendments to the standard

There are no amendments to IFRS 16 in order to comply with the Companies Act and related Regulations.

Disclosure exemptions

Lessees

  • No requirement to disclose separate information about leases.
  • The exemption from the requirement to present a maturity analysis for lease liabilities in accordance with the requirements of IFRS 7 is available only when the entity provides a separate maturity analysis for lease liabilities in accordance with company law.

Lessors

  • No requirement to disclose profit or loss.
  • No requirement to provide explanations of significant changes in the net investment in finance leases.

ICAEW guides and support

Factsheets and FAQs

IFRS 16 Leases
Financial Reporting Faculty, Updated 08 April 2021
The faculty’s factsheet IFRS 16 Leases has been updated for recent amendments for COVID-19-related rent concessions and IBOR Phase 2.

IFRS 16 Leases
Financial Reporting Faculty, Updated 01 September 2021
This FAQ answers questions on IFRS 16 Leases, covering topics such as the lease accounting model, changes for lessors, disclosure requirements, differences with FRS 102, and the impact on financial statements.

Annual factsheets

These exclusive factsheets, produced annually by the Financial Reporting Faculty for its members, highlight all new and modified requirements for preparers of IFRS accounts. Each annual edition focuses primarily on new requirements with mandatory application for preparers with periods beginning on or after 1 January of that year.

2021 IFRS accounts
Financial Reporting Faculty, 10 August 2021

2020 IFRS accounts
Financial Reporting Faculty, updated August 2021

2019 IFRS accounts
Financial Reporting Faculty, 4 December 2019

2018 IFRS Accounts
Financial Reporting Faculty, 6 August 2018

Articles and features

IASB provides relief for COVID-19-related rent concessions
Insights: Viewpoints on the news, June 2020
Many lessors are providing rent concessions to lessees as a result of the Coronavirus pandemic. This article introduces the amendments to IFRS 16 Leases issued by the IASB to help lessees account for these changes.

IFRS 16 Leases - tackling the practicalities
By All Accounts, July 2019
Avni Mashru discusses the impact of bringing leases on balance sheet under IFRS 16.

Leases
By All Accounts, July 2018
Jake Green of Grant Thornton details the practical challenges companies face in applying IFRS 16 Leases, including identifying all your leases, completeness of lease information, getting all the documentation, estimates, using the portfolio exemption, modifications and modelling and transition.

IFRS 16 Leases: Putting theory into practice
By All Accounts, July 2017
Special issue of the Financial Reporting Faculty's magazine focusing on IFRS 16, presenting views from the leading experts to help members plan for the changes ahead.

Credit where credit's due
Sam Holland, By All Accounts, July 2017
The author provides a rating agency's perspective on IFRS 16.

Business as usual?
Peter Westaway, By All Accounts, January 2017
The author looks at some of the challenges businesses are facing as they plan to implement the IASB’s new leasing standard.

A new lease of life?
Kathryn Donkersley, By All Accounts, July 2016
The author provides an overview of the IASB's long-awaited new leases standard.

The nightmare before Christmas?
Peter Hogarth, By All Accounts, January 2016
This article looks at some of the challenges that lie ahead as entities prepare to get to grips with the IASB's new leasing standard.

Webinars

Contract modifications under IFRS
Financial Reporting Faculty, December 2020
Explore the accounting implications of contract modification scenarios relating to revenue, financial instruments, leases and employment contracts.

IFRS 16 Leases - implementation and recent developments
Financial Reporting Faculty, September 2020
Discover the IFRS 16 implementation lessons learned and hear about the COVID-19-related rent concessions amendment.

Bitesize Briefing: IFRS 16 Leases and the COVID-19-related rent concessions amendment
Financial Reporting Faculty, June 2020
A short webcast providing an overview of the amendment to IFRS 16 Leases relating to rent concessions granted during the COVID-19 pandemic.

2019 Financial Reporting Conference: IFRS 16 Leases – the final countdown
Financial Reporting Faculty, October 2019
Peter Hogarth, PwC, pinpoints the hot topics in implementing IFRS 16 Leases at the Financial Reporting Faculty’s 2019 conference.

IFRS 16 Leases - the impact
Financial Reporting Faculty, May 2019
This webinar looks at the impact of IFRS 16 Leases, its interaction with evolving business models and potential challenges for users.

IFRS Update June 2018
Financial Reporting Faculty, 19 June 2018
This webinar provides a summary of new and revised standards applicable in 2018 and beyond. It looks at the lessons we can learn from those already implementing IFRS 9 and IFRS 15, the impact of IFRS 16 on 2018 financial statements, IFRS 17 for those who are not insurers, and other IFRS amendments and new IFRICs.

IFRS 16 Lease – making sense of the new standard
Financial Reporting Faculty, 26 July 2017
IFRS 16 is effective for annual periods beginning on or after 1 January 2019. As this date draws ever nearer, this webinar for Financial Reporting Faculty members will inform you of the standard’s key requirements before focusing on practical issues and implementation challenges.


Bloomsbury Core Accounting and Tax Service

Eligible firms have free access to Bloomsbury Professional's comprehensive online library, comprising more than 60 titles from some of the country's leading tax and accounting subject matter experts. Find out who is eligible and how you can access the Core Accounting and Tax Service.

IFRS 16 Leases 🔒
Steve Collings, Bloomsbury Professional (2021)
A section on accounting for a lease under IFRS 16, with an example calculation for the lease of an office under IFRS 16.

Terms of use: You are permitted to access, download, copy, or print out content from eBooks for your own research or study only, subject to the Acceptable usage terms.

If you have any difficulties using these eBooks, please contact library@icaew.com.


eBooks

Access to eBooks is only available to ICAEW members and ACA students – please log in to view these titles.

Leases
EY, International GAAP 2021 (2020)
The latest edition of this comprehensive guide offers a global perspective on complex technical accounting issues to help practitioners interpret and implement IFRS. It contains worked examples and illustrations from published financial reports of major listed companies from around the world. This chapter discusses IFRS 16.

If you have any difficulties using these eBooks, please see our Help and support advice or contact library@icaew.com.


Example accounts

IFRS model accounts and disclosure checklists
Online disclosure checklists, general IFRS illustrative statements and compliance questionnaires collected by the ICAEW Library.

Company Reporting (Croner-i)

The ICAEW Library can provide examples of real-life company reports to help keep you up-to-date with reporting practices and benchmark your financial reporting compliance. Company Reporting analyses current IFRS disclosures from public companies, organised by industry sector. It also provides detailed monthly Common Practice reports on specific issues.

Contact us on +44 (0)20 7920 8620, by web chat, or at library@icaew.com to get any documents from Company Reporting.


External resources

Some guides and comparisons that we link to may pre-date the latest amendments to this standard. While these resources contain useful information, please treat them with appropriate caution.

IFRS 16 COVID-19 Related Rent Concessions Amendment
PwC, June 2020
In-depth guide following the amendment to IFRS 16 issued by the IASB in May 2020. The guide answers a range of frequently asked questions on the scope of the amendments, measurement, presentation and disclosure, transition and effective date. 

Application of IFRS 16 in the light of the covid-19 uncertainty
IASB, May 2020
Updated summary from the IASB highlighting its guidance on applying IFRS 16 to rent concessions (issued in April 2020) and the amendment issued in May 2020 to the standard.

Applying IFRS: A closer look at IFRS 16 Leases
EY, December 2019
In-depth guide discussing key concepts of the standard, lessee accounting, lessor accounting, subleases, sale and leaseback transactions, business combinations, and transition issues. It includes a table showing key differences between IFRS 16 and IAS 17, and a table summarising the differences with US GAAP.

IFRS 16 Thematic Review: Review of Interim Disclosures in the First Year of Application
FRC, November 2019
Report with excerpts of published accounts illustrating good examples of disclosure and the FRC's key findings on transition to IFRS 16, changes to accounting policies, transition disclosures, significant judgements, disclosures, and comparability and use of alternative performance measures (APMs).

IFRS 16 ‘Leases’: Interaction with other standards
PwC, June 2019
Guide highlighting the impact of IFRS 16 on impairment of non-financial assets, financial instruments, taxes, and other areas.

IFRS 16 implications for lessors in the real estate industry
PwC, April 2019
In-depth guide exploring the impact of IFRS 16 on lessors. It focuses on lease payments, separating or combining components of a contract, subleases, sale and leaseback transactions, and lease modifications.

Applying IFRS: Presentation and disclosure requirements of IFRS 16 Leases
EY, November 2018
In-depth guide examining presentation in the primary financial statements, disclosures in the notes to the financial statements, and transition disclosures. The guide also includes extracts from EY's IFRS disclosure checklist.

Applying IFRS: Impairment considerations for the new leasing standard
EY, November 2018
In-depth guide examining the potential effects of IFRS 16 on impairment testing. It deals with impairment of right-of-use assets, testing groups of cash generating units for impairment, other factors, and transition methods. 


Further reading

Manuals and handbooks

The ICAEW Library stocks the latest IFRS handbooks and manuals. You can browse all our books on IFRS 16 and leasing or request any of the following popular titles by contacting us on +44 (0)20 7920 8620, by web chat, or at library@icaew.com

Insights into IFRS 2020–21
KPMG, Sweet and Maxwell, 2020
Manual providing practical guidance with an emphasis on the real-life application of IFRS, with examples based on actual questions that have arisen in practice around the world.

Wiley IFRS 2020: Interpretation and application of IFRS standards
PKF, Wiley, 2020
Reference manual providing full coverage of the latest standards and thorough guidance for implementation, featuring practical tools and insight from a practitioner's perspective.

Manual of accounting: IFRS supplement 2020
PwC, LexisNexis, 2019
Practical guidance on the standards and the accounting requirements of UK law applicable to UK users of IFRS.

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