10/01/2026
📘 IFRS 16 – Leases | Quick Summary
🔹 Core Principle
IFRS 16 requires lessees to recognize almost all leases on the balance sheet.
➡️ No more “operating vs finance lease” distinction for lessees.
🔹 At lease commencement, the lessee recognizes:
✅ Right-of-Use (ROU) Asset
– Represents the right to use the leased asset
✅ Lease Liability
– Present value of future lease payments
🔹 Subsequent Measurement
📌 ROU Asset
• Depreciated over lease term
• May be impaired (IAS 36)
📌 Lease Liability
• Increased by interest expense
• Reduced by lease payments
🔹 Impact on Financial Statements
📊 Statement of Financial Position
• Assets ↑
• Liabilities ↑
📈 Profit or Loss
• Depreciation + Interest (instead of rent expense)
💰 Cash Flow Statement
• Principal → Financing activities
• Interest → Operating / Financing (policy choice)
🔹 Exemptions (Lessees can choose not to capitalize):
✔️ Short-term leases (≤ 12 months)
✔️ Low-value assets (e.g. laptops, small office equipment)
🔹 Lessor Accounting
➡️ Unchanged from IAS 17
• Finance lease
• Operating lease
🎯 Why IFRS 16 matters?
• Improves transparency
• Reduces off-balance-sheet financing
• Impacts gearing, EBITDA & performance ratios
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