What are the key requirements for IFRS lease accounting compliance?

What are the key requirements for IFRS lease accounting compliance?

The key requirements include recognizing leases on the balance sheet, classifying them as either finance or operating leases, and measuring lease liabilities and right-of-use assets.

How do I determine if a lease is a finance or operating lease?

You can determine this based on criteria such as transfer of ownership, purchase options, lease term, and present value of lease payments.

What impact does IFRS 16 have on financial statements?

IFRS 16 increases transparency by bringing leases onto the balance sheet, affecting assets, liabilities, and equity ratios.

Are there any exemptions for short-term leases?

Yes, IFRS 16 allows exemptions for short-term leases (12 months or less) and leases of low-value assets.

Can you explain how to calculate the lease liability?

Lease liability is calculated as the present value of future lease payments, discounted at the interest rate implicit in the lease or the lessee's incremental borrowing rate.