- Key financial metrics will be affected by the recognition of new assets and liabilities, and differences in the timing and nature of lease expenses
- Lease definition replaces lease classification as the key on-/off- balance sheet test for lessees
- There will be an increased focus on whether an arrangement contains a lease and possible changes to whether transactions, such as service arrangements, contain leases
- The impact may be broader than the finance team as key contract terms, such as variable pricing mechanisms, will impact the value of leases on balance sheet
- There are multiple transition options and practical expedients.
The transition method chosen may have a major impact on the cost of implementation and longer term effect of leases on the financial statements.
Read the full KPMG in Mining: Practical Application Guidance report for more information.