The IASB has now issued its new international accounting standard on leases, IFRS 16 Leases. For lessees, the new standard has important implications, bringing most leases on-balance sheet, while eliminating the dichotomy between finance leases and operating leases. This will lead to a significant increase in the reporting of net debt in certain sectors including the airline industry. The new standard could also impact lessees banking covenants.
Lessor accounting under IFRS 16 Leases is mostly unchanged.
IFRS 16 Leases is effective for periods of account beginning on or after 1 January 2019.
For a link to the IASB announcement, click here.