Mr.Accounting

Apex Accountants and Tax Advisors
84a Queens Road, Buckhurst Hill

We are an organization providing academic and professional service related to finance and accounting

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

Send a message to learn more

10/01/2026

https://www.udemy.com/course/accounting-for-tangible-assets-ias-16ias-23ias-40/?couponCode=5437F5C8B0D299D01ABC

Accounting for Tangible Assets (IAS 16/IAS 23/IAS 40) Tangible Non-Current Assets: A Complete Guide - IAS 16/IAS23/IAS/40 and Other Relevant Accounting Standards