Recap
As previously reported (here), lessees with operating leases of property accounting under IFRS will account for these leases in a significantly different way once they adopt IFRS 16.
IFRS 16 is effective for accounting periods beginning on or after 1 January 2019 (although it is possible to adopt early). It will apply to companies accounting under IFRS and FRS 101.
Under IFRS 16, the lessee’s balance sheet will include a liability for future lease payments and a corresponding Right of Use Asset will be recognised. Rental expense in the income statement will be replaced with depreciation of the Right of Use Asset and a finance charge associated with the liability.
Timing of tax relief for leasing costs could change (and may well be advanced) given that the change generally results in a front loading of the accounting expense.
