IFRS 16 ‘Leases’ sets out the principles for the recognition, measurement, presentation
and disclosure of lease arrangements, transforming the way entities report leasing
activities. It was introduced to address concerns about the lack of transparency under
the previous leasing standard.
Contents
IFRS 16 requires lessees to recognise most leases on the balance sheet through a right-of-use asset and a corresponding lease liability. This approach provides a more faithful representation of an entity’s financial position and performance, enhancing comparability and giving investors greater visibility over leverage and capital employed.
Our ‘Insights into IFRS 16’ series summaries key areas of the Standard and aims to demystify those key requirements that are challenging to apply in practice. This article considers the accounting for lease payments.
