Leases – 2019 effective date for new standard

Leases – 2019 effective date for new standard

This IFRS Newsletter: Leases brings you the latest on the forthcoming leases standard.


KPMG IFRS Newsletter: Leases publication image: two red trucks on a highway.

We examine the latest developments on the leases project and what the IASB’s decisions could mean for you.

A 2019 effective date for the new leases standard has been set by the IASB in its final public meeting on the project.

The Boards have made significant conceptual compromises to finalise the project – above all, on the definition of a lease. The Boards have devoted more discussion and outreach to this topic than to any other area of the standard. However, many stakeholders remain concerned about the robustness of the new definition.

For more detail on these discussions, read Issue 18 of our IFRS Newsletter: Leases. Previous issues can be found on our Newsletters web page.

2019 effective date

The IASB has decided that the new leases standard – IFRS 16 Leases – will be effective for accounting periods beginning on or after 1 January 2019.

Early adoption will be permitted, provided the company has adopted IFRS 15 Revenue from Contracts with Customers. The IASB expects that its new leases standard will be ready for publication in December 2015.

The FASB will discuss the effective date of its version of the standard in November 2015.

Sweep issues

The IASB also addressed five sweep issues identified during the drafting process, namely:

  • accounting for lease modifications;
  • reassessment of the discount rate for floating interest rate leases;
  • costs associated with returning an underlying asset at the end of a lease;
  • the treatment of short-term leases and leases of low-value assets in a business combination; and
  • required disclosures for leases that are part of a disposal group that is held for sale or a discontinued operation.

Are you ready?

Planning your implementation project for the new leases standard will take time and care. However, it might be worth asking yourself a few simple questions now – just to get a feel for the scale of the challenge ahead.

The checklist on page 8 of our newsletter asks 10 key questions to help you prepare for implementation.

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