Are you ready for one of the biggest changes in accounting?
As of 1 January 2019, IFRS 16 – Leases has replaced IAS 17, and its application will bring very big changes for lessees. Requirements of the new standard are related to the recognition of right-of-use assets and lease liability in the balance sheet, while in the P&L, the cost of leasing is “moving” to the costs positions which are not included in the calculation of one of the most frequently used performance indicators – EBITDA: depreciation and interest expense.
The first application of IFRS 16 requires a comprehensive analysis of a leasing contracts, with some of the issues you will face being: what is an irrevocable lease period, is there an option to renew or terminate the contract and what is the probability that such option will be used, what interest rate should you apply when the contract does not define an interest rate, etc. For many companies, the implementation of the new standard will be a real challenge.
TPA team members, who already have experience in implementing IFRS 16 in international companies, are at your disposal. More information about the services that our consultants can offer you in the field of IFRS.
