IFRS 16 takes effect in 2019. The larger the lease portfolio, the greater the impact on reporting metrics and accounting.
A more transparent balance sheet; the larger the lease portfolio, the greater the impact
The new leases standard – IFRS 16 – will require companies to bring most leases on-balance sheet from 2019. Under the new standard, companies will recognise new assets and liabilities, bringing added transparency to the balance sheet. At present, many analysts adjust financial statements to reflect lease transactions that companies hold off-balance sheet. For the first time, analysts will be able to see a company’s own assessment of its lease liabilities, calculated using a prescribed methodology that all companies reporting under IFRS will be required to follow.
All companies will need to assess the extent of the standard’s impacts so that they can address the wider business implications – and can expect analysts to take a close interest. Areas of focus may include:
Would you like to be ready for IFRS 16 in 2019? Use the resources below to get started or contact us for more information.