Grant Thornton International Ltd has updated Insights into IFRS 16 – Definition of a lease.
Overview
The Insights into IFRS 16 series summarizes key areas of IFRS 16 Leases and aims to demystify those key requirements that are challenging in practice. Since its first release, the Standard has gone through a number of amendments as well as IFRS Interpretation Committee decisions relating to IFRS 16. Grant Thornton International Ltd is therefore going through a process of reviewing and updating its publications to ensure that they all reflect up-to-date information and guidance, focusing on areas where there have been changes.
The updated document Insights into IFRS 16 – Definition of a lease provides guidance on the definition of a lease.
The issue
IFRS 16 changes the definition of a lease from the evaluation in IFRIC 4, Determining whether an Arrangement Contains a Lease, and provides guidance on how to apply this new definition. As a result, some contracts that did not contain a lease under IFRIC 4 will meet the definition of a lease under IFRS 16 and vice versa.
The updated document explains the new lease definition and the three key evaluations necessary to determine that the contract is or contains a lease.
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