IFRS 16 | Leases | Part 1 | IFRS | SBR | FR | ACCA | ICAEW | Luqman Rafiq

In this video, we will be discussing IFRS 16 Leases, the new accounting standard that replaces IAS 17 Leases. We will cover the key changes and requirements of IFRS 16, including the new classification criteria for leases, the new lease liability and right-of-use asset recognition, and the updated disclosures required in financial statements. Whether you're an accountant, finance professional, or just interested in learning more about the changes to lease accounting, this video is for you.

The video is focused on accounting for lease by Lessee. Under IFRS 16 Leases, lessees are required to recognize a right-of-use (ROU) asset and a lease liability on their balance sheet for all leases classified as a finance lease. This includes leases for assets such as real estate, vehicles, and equipment. The ROU asset represents the lessee's right to use the leased asset during the lease term, while the lease liability represents the lessee's obligation to make lease payments.

The initial measurement of the ROU asset and lease liability is equal to the present value of the lease payments, discounted using the lessee's incremental borrowing rate. The lessee then recognizes the lease payments in their income statement as an expense, which includes a combination of interest expense on the lease liability and amortization of the ROU asset.

Over time, as the lessee makes lease payments, the lease liability is reduced, and the ROU asset is amortized. At the end of the lease term, the lessee will either have a residual value obligation to pay or an option to purchase the leased asset.

Lessees are also required to disclose certain information about their leases in their financial statements, such as the total lease liabilities and ROU assets, the lease payments, and the maturity of the lease liabilities.

Overall, the new IFRS 16 Leases accounting standard will result in lessees recognizing more assets and liabilities on their balance sheets, which will provide a more accurate picture of their financial position and performance.

This Video by ‪@LuqmanRafiq‬ discusses the accounting by Lessee as per IFRS 16.

The lecture is delivered during the Online Live Batch for ACCA Strategic Business Reporting ( SBR) for June 2023 session. For more lectures you can visit our website www.escribiracademy.com or you can contact us on +923458287222.

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