The leasing standard IFRS16 has been made effective per January 2019. This has a drastic impact on every company using rentals or or leasing to obtain access to assets.
The new financial reporting standard on leasing (IFRS16) aims to improve transparency and requires the lessees to recognize assets and liabilities arising from a lease, including their lease cars.
Important changes are:
The new IFRS16 will require changes in accounting. Assessment of all contracts will be a very data-intensive process, more than you were used to. Under IFRS16 you may choose not to recognize assets and liabilities for leases with a lease term of less than 12 months. Lease terms of 12 months and older should be on balance. All relevant facts and circumstances that offer you an economic incentive should be considered. And there might be strategic impacts on KPIs, remuneration schemes, leasing strategy and loan covenants too.
So the new standard will have an impact on your organization. For a smooth transition, it’s necessary you start preparing now by:
Business Lease is here to help. Do not hesitate to contact us to be informed how the IFRS16 regulation impacts your company. Or watch this information video: