After extensive consultations that had started with a discussion paper published in 2009, the IASB finally issued IFRS 16 Leases on 13 January 2016.
The new standard replaces IAS 17 with its accounting requirements which were introduced 30 years ago and no longer match today’s economic reality. As leasing is an important and flexible measure of financing, e.g. of the rental of an office building (also for companies in the financial service industry), the new standard will improve the transparency and comparability of information on off-balance sheet leases by bringing them onto the balance sheet.
IFRS 16 defines that a contract is (or contains) a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Compared to the definition in IAS 17, the definition is changed but for most contracts the IASB does not expect an impact on the conclusions if a contract contains a lease. Service contracts (in case of a lease of a property such as cleaning, security and advertising services) which are often combined with leases in a single contract are still not subject to lease accounting.