IFRS 16 - Leases

IFRS 16 replaces IAS 17, requires lessee right-of-use assets and lease liabilities on the balance sheet, shifts profit and loss impact, and ends off-balance-sheet financing with stricter sale-and-leaseback rules.

IFRS 16 requires lessees to recognize a right-of-use asset and a lease liability for leases longer than 12 months, with a low-value exception, replacing IAS 17.

Describe IFRS 16 lease liability: initial present value of future payments, using the implicit or borrowing rate, then subsequent interest and payments and current/non‑current splits.

Understand the right of use asset under IFRS 16, its initial measurement with lease liability, and depreciation and model choices, illustrated by a practical example.

Elect to apply IFRS 16 exemptions for short-term leases (less than 12 months) and low-value assets (under $5,000). Expense lease rentals rather than recognizing lease assets or liabilities.

Explore how IFRS 16 handles sale and leaseback transactions, applying IFRS 15 control criteria to distinguish genuine sales from artificial ones, and outline qualifying sale versus loan treatment.

Show how to account for sale and leaseback under IFRS 16, including derecognizing the old asset, recognizing a right-of-use asset, computing right retained and right transferred, and recognizing a gain.

IFRS 16 provides two exceptions: small value contracts under $5,000 and short-term contracts under one year, both not recognized on the balance sheet to avoid off-balance-sheet financing.

IFRS 16 reclassifies leases from operating to finance, emphasizes control of identified assets, and increases balance sheet assets and liabilities with front-loaded depreciation and interest on right-of-use assets.

Allocate a combined lease payment into lease and non-lease components using standalone prices, yielding a right-of-use asset of 48,000 and a 12,000 service cost per year.

Explore calculating lease liabilities under IFRS 16 by deriving the present value of payments, distinguishing current and noncurrent liabilities, and recognizing interest and right-of-use asset depreciation.

Learn how refundable deposits and renovations affect lease accounting under IFRS 16, including rent-free periods, premiums, and how to record lease liabilities as current and non-current.

Learn how to depreciate right-of-use assets under IFRS 16, recognizing depreciation over the lease term or asset life, with exceptions when purchase options transfer ownership.

Explore IFRS 16 lease criteria, including control and specified assets, analyze sale and leaseback scenarios, and compute lease liability, depreciation, and finance costs through practical case studies.

Explore IFRS 16 leases and deferred tax. Learn how to measure right-of-use assets and lease liabilities, and assess tax effects under IAS 12.

Explore IFRS 16 remeasurement of lease liabilities, adjusting the right-of-use asset for CPI-driven changes, applying depreciation and finance costs to reflect updated terms.

Compare IFRS 16 sale and leaseback outcomes: gearing, EBIT, asset turnover, and ROCE, depending on whether it qualifies as a sale under IFRS 15.

Explain how IFRS 16 handles sale and leaseback, determine sale versus no-sale, allocate right of use and right retained, and measure gains and lease liabilities.

Explore how IFRS 16 handles sale and leaseback, determine if a sale occurred under IFRS 15 criteria, and measure right-of-use assets, lease liabilities, and off-balance-sheet financing implications of disposal gains.

Explain IFRS 16 lessee and lessor accounting, define finance and operating leases, the right-of-use asset, and illustrate operating lease treatment with a Carson example.

Identify a lease under IFRS 16 by confirming the asset is identified and the right to direct its use, then measure the right-of-use asset and lease liability.