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IFRS 16 and operating leasing

May 2018

IFRS 16 will change the way that companies recognise leases on their balance sheets, and impact on loan covenants, but it won’t change the benefits that leasing brings.

The long-awaited accounting standard, IFRS 16 – Leases, will finally come into effect on 1 January 2019, with the purpose of providing transparency, accountability and efficiency to financial markets around the world.

It replaces the existing leasing standard, IAS 17, and will affect every company applying IFRS that either rents or leases assets.1

Our article discusses the changes in more detail and considers the ongoing benefits that operating leasing will continue to bring.

1Companies operating under FRS 102 will not be affected because the Financial Reporting Council has deferred the decision on whether to adopt IFRS 16.