Tag Archives: KUDOS PRS

Are you Ready? IFRS 16 – Leases

Are you Ready? IFRS 16 – Leases


  • Effective 1 Jan 2019
  • IAS 17 no longer apply
  • Change in Treatment of lease payments
  • Concept of “Right -to- Use”
  • No classification of leases in lessee books – operating / financing
  • Different reporting in the Financial Statements
  • Can choose to apply a Full Retrospective Approach or a Modified Retrospective Approach
  • No change in treatment in lessor books

Challenges Involved

  • Identification of asset in lease contract
  • Classification of a lease into Short-term, Low- value and Excluded lease asset
  • Separation of lease and non-lease component
  • Fixed and variable lease payments
  • Selection of Incremental borrowing rate
  • Valuing a lease liability and asset
  • Lease liabilities- Long term & short term
  • Lease modifications / change in existing lease
  • Lease accounting
  • Financial presentation and disclosures
  • Subsequent re-measurement
  • Change in Ratios