January 2016
Effects Analysis
International Financial Reporting Standard®
IFRS 16 Leases
This Effects Analysis accompanies, but is not part of, IFRS 16.
What is the purpose of this Effects Analysis?
This Effects Analysis describes the likely costs and benefits of IFRS 16. The costs and benefits are collectively referred to as ‘effects’.
The International Accounting Standards Board (IASB) gains insight on the likely effects of new or revised Standards through its
exposure of proposals, and through its analysis and consultation with stakeholders. This document describes those considerations.
The document discusses the effects of IFRS 16 mainly from a lessee perspective. This is because the accounting for a lessor is largely
unchanged. The effects of IFRS 16 on lessor accounting are discussed in Section 9 of the document.
Background
IFRS 16 supersedes IAS 17 Leases (and related Interpretations) and is effective from 1 January 2019.
The IASB and the US national standard-setter, the Financial Accounting Standards Board (FASB), have been working jointly to
improve the accounting for leases in International Financial Reporting Standards (IFRS) and US Generally Accepted Accounting
Principles (US GAAP).
IFRS 16 completes the IASB’s project to improve financial reporting for leases.
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Effects Analysis | IFRS 16 Leases | January 2016
Executive Summary
The IASB has developed a new Leases Standard, IFRS 16,
which supersedes IAS 17 Leases. The IASB worked jointly
with the FASB on this project. The FASB expects to
publish its new Leases Standard in early 2016.
A company1 is required to apply IFRS 16 from 1 January
2019. A company can choose to apply IFRS 16 before
that date but only if it also applies IFRS 15 Revenue from
Contracts with Customers.
The IASB and the FASB have reached the same conclusions
in many areas of lease accounting, including requiring
leases to be reported on the balance sheet, how to define a
lease and how...