IFRS 16 – An overview

Global IFRS Institute | Leases

• Application issues
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IFRS 16 Leases has now been successfully adopted by companies reporting under IFRS^® Standards.

IFRS 16 had a significant impact on the financial statements of lessees with ‘big-ticket’ leases, from retailers to banks to media companies. Although lessors found much that was familiar in IFRS 16, they faced new guidance on a number of aspects, from separating lease and non-lease components, to more radical accounting changes for more complex arrangements such as sale-and-leaseback transactions and sub-leases.

Many implementation challenges have become day-to-day application issues. Some are technical accounting challenges – e.g. identifying which transactions are or contain leases. Others relate to systems and processes – e.g. gathering the data required to drive lease accounting and support the ongoing judgements required to apply IFRS 16.

Some of these challenges could not have been foreseen. The COVID-19 coronavirus pandemic has resulted in record numbers of changes to lease agreements. An in-depth understanding of IFRS 16’s detailed guidance on lease modifications is currently essential, and many lessees have taken advantage of the new practical expedient for rent concessions. 

Our IFRS 16 – An overview (PDF 2 MB) publication introduces the accounting models for lessees and lessors. It then takes a deeper dive into critical areas such as lease definition and accounting for lease modifications.

It includes examples and insights to help you understand the requirements and their impacts on your financial statements. If you are looking for a practical overview of IFRS 16, or just a refresher, you’ve come to the right place. 

Visit our Leases hot topic page for more insight on lease accounting under IFRS Standards. We also have in-depth guides on specific topics, which make up our new handbook on accounting for leases under IFRS Standards.

For further information on the financial reporting implications of the COVID-19 pandemic, see our COVID-19 financial reporting resource centre.

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