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
IFRS 16 Issued Standard
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IFRS 16 summary and timeline
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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.
4. Lease Liability in a Sale and Leaseback – amendments to IFRS 16
Effective from 1 January 2024; earlier adoption is permitted.
IFRS 16 is amended to require that a seller/lessee subsequently measures lease liabilities arising from a sale and leaseback in a way that does not result in recognition of a gain or loss that relates to the retained right of use.
Not UK endorsed or EU endorsed as at 30 November 2022. Read more on UK endorsement and EU endorsement of IFRS standards.
Related IFRIC interpretations
- IFRIC 1 Existing Decommissioning, Restoration and Similar Liabilities
Addresses accounting for a change in a provision that is included in the carrying amount of an item of PPE.
- IFRIC 12 Service Concession Arrangement
Accounting guidance for arrangements where a contract is granted for the supply of public services such as roads.
- SIC 29 Disclosure – Service Concession Arrangements
Prescribes disclosures required by a concession operator and concession provider joined by a service concession arrangement.
- SIC 32 Intangible Assets – Website Costs
SIC 32 addresses the appropriate accounting treatment for costs at each stage of the development of a website.
UK reduced disclosures – FRS 101
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 for FRS 101 preparers
There are no amendments to IFRS 16 in order to comply with the Companies Act and related Regulations.
Disclosure exemptions for FRS 101 preparers
- 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.
- 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, 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 FAQs
Financial Reporting Faculty, 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.
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.
2022 IFRS Accounts
Financial Reporting Faculty, August 2022
Provides more information on Annual Improvements 2018 – 2020 amendments to IFRS 16.
2021 IFRS accounts
Financial Reporting Faculty, updated August 2022
Provides more information on Interest Rate Benchmark Reform Phase 2 – amendments to IFRS 16.
2020 IFRS accounts
Financial Reporting Faculty, updated August 2021
Provides more information on Covid-19-Related Rent Concessions – amendments to IFRS 16 and Covid-19-Related Rent Concessions beyond 30 June 2021.
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.
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.
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.
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.
Bloomsbury 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 Bloomsbury 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.
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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.
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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)
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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.
International GAAP 2022: Generally Accepted Accounting Practice under IFRS
EY International Financial Reporting Group, 2022
Detailed guide on interpreting and implementing IFRS, with illustrative examples and extracts from financial statements. The manual is available online (free registration required) as part of EY Atlas Client Edition. Chapters and sections are searchable and downloadable in PDF format. The whole book is also downloadable in ePub format for offline access.
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.
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).
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 firstname.lastname@example.org
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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