On January 13, the IASB issued IFRS 16, Leases, which requires most lessees to present right-of-use assets and lease liabilities on-balance sheet. IFRS 16 also eliminates the current dual accounting model for lessees, which distinguishes between on-balance sheet finance leases and off-balance sheet operating leases. Instead, the new standard introduces a single, on-balance sheet accounting model that is similar to current accounting for finance leases. Additionally, lessor accounting will remain similar to current practice, i.e., lessors will continue to classify leases as finance and operating leases.
IFRS 16 is effective for companies that apply IFRS for annual periods beginning on or after January 1, 2019. Earlier application is permitted for entities that apply IFRS 15, Revenue from Contracts with Customers, at or before the date of initial application of IFRS 16.
KPMG's ISG published a Web article and a SlideShare presentation, to help interested parties understand the requirements of the new standard, and the possible effects on an entity's business. A PDF version of the presentation also is available.
The FASB is expected to issue its new leases standard in February.