IFRS 16: Lease accounting by the lessee

Leasing remains an important corporate financing instrument. However, the depiction of leasing contracts in accordance with IFRS 16 can be described as rather complex, although the message is quite simple: The standard results in (almost) all leases being recognized in the lessee’s balance sheet.

The complexity lies in the assessment of contracts as leasing agreements, in the determination of the leasing liability, and in the calculation of the cost of the right-of-use asset, i.e. the leased asset. This article highlights the key aspects from the lessee’s perspective.