Last updated: 22 December 2019
Statement of financial position
Right-of-use assets and lease liabilities are presented separately in the statement of financial position or are disclosed in the notes. If the right-of-use assets are not presented separately, they should be included in the same line as is suitable for the underlying assets (IFRS 16.47-48).
Profit or loss
Depreciation charge for the right-of-use asset is presented the same way as depreciation/ amortisation of assets accounted for under IAS 16/IAS 38. IFRS 16 does not require separate presentation of depreciation of right-of-use assets.
Interest expense on the lease liability should be included in finance costs (IFRS 16.49).
Statement of cash flows
Leases impact the statement of cash flows in the following way (IFRS 16.50):
- repayments of the principal portion of the lease liability are presented within financing activities
- payments relating to accrued interest are classified according to the policy choice for interest payments
- short-term lease payments and payments for leases of low-value assets are presented within operating activities when the lessee adopted a relevant recognition exemption
- variable lease payments not included in the measurement of the lease liability are presented within operating activities
Disclosure
Disclosure requirements for lessees are set out in paragraphs IFRS 16.51-60 and IFRS 16.B48-B52. Interestingly, lessees should gather all information about their leases in a single note or separate section in its financial statements, although cross-referencing is allowed (IFRS 16.52).
See also Examples 22 and 23 accompanying IFRS 16.
More about IFRS 16
See other pages relating to IFRS 16: