Presentation and Disclosure of Leases (IFRS 16)

Statement of financial position

Under IFRS 16.47-48, right-of-use assets and lease liabilities must either be presented separately in the statement of financial position or disclosed in the accompanying notes. If not separately presented, right-of-use assets should be included in the same line item as that applicable to the underlying assets.

Statement of profit or loss

The depreciation charge for right-of-use assets must be presented in the same manner as depreciation or amortisation for assets accounted for under IAS 16 and IAS 38. Notably, IFRS 16 does not mandate a separate presentation for the depreciation of right-of-use assets.

Interest expense related to lease liabilities is to be reported as part of finance costs (IFRS 16.49).

Statement of cash flows

The impact of leases on the statement of cash flows includes (IFRS 16.50):

  • Repayments of the principal portion of the lease liability, presented within financing activities.
  • Payments related to accrued interest, classified according to the accounting policy for interest payments.
  • Short-term lease payments and payments for low-value asset leases, presented in operating activities if the lessee has adopted the relevant recognition exemption.
  • Variable lease payments not included in the lease liability measurement, also presented in operating activities.

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For lessees, disclosure requirements are detailed in IFRS 16.51-60 and IFRS 16.B48-B52. Interestingly, all lease-related information should be consolidated into a single note or a dedicated section within the financial statements, although cross-referencing is permitted (IFRS 16.52). For illustrative examples, refer to Examples 22 and 23 accompanying IFRS 16.

More about IFRS 16

See other pages relating to IFRS 16:

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