IFRS 16: Leases
IFRS 16 brought lease liabilities onto the balance sheet for lessees, fundamentally changing lease accounting. This guide covers both lessee and lessor perspectives, helping you navigate ROU assets, lease liabilities, and all the exemptions.
⚠️ The Big Change from IAS 17
Under IAS 17, operating leases were off-balance sheet. IFRS 16 brings almost all leases onto the lessee's balance sheet, recognizing a Right-of-Use (ROU) asset and a corresponding Lease Liability. This significantly impacts financial ratios like gearing and ROCE.
Course Content
Introduction to IFRS 16 & Key Changes
Understand the shift from IAS 17, the single lessee model, and the critical definition of a lease.
Lessee Accounting (The Big Change!)
Master ROU assets and lease liabilities: initial recognition, subsequent measurement, and modifications.
Lessor Accounting
Classify leases as finance or operating, and apply the correct accounting treatment for each.
Sale and Leaseback Transactions
Learn how to account for complex sale and leaseback deals, including restricted gain recognition.
Disclosures & Exam Preparation
Disclosure requirements, common exam mistakes, and practice questions with worked solutions.
Key Exemptions (Practical Expedients)
Short-term Leases
Leases with a term of 12 months or less at commencement with no purchase option. Elected by class of asset.
Low-value Assets
Assets with a low value when new (typically ~$5,000 or less). Elected on a lease-by-lease basis.
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