January 2016

Executive Summary

On January 13, 2016 the IASB released IFRS 16 Leases, completing its long-running project on lease accounting. IFRS 16 will require lessees to account for leases “onbalance sheet’’ by recognizing a “right-ofuse” asset and a lease liability.

IFRS 16 also:

  • changes the definition of a lease;
  • sets requirements on how to account for the asset and liability, including complexities such as non-lease elements, variable lease payments and option periods;
  • provides exemptions for short-term leases and leases of low-value assets;
  • changes the accounting for sale and leaseback arrangements;
  • largely retains the IAS 17 Leases approach to lessor accounting;
  • introduces new disclosure requirements.

The Standard is effective for annual periods beginning on or after January 1, 2019, with early application permitted in certain circumstances.