Practical guidance and support

Our experienced team provides practical advice and support on all aspects of IFRS 16, helping organisations understand and apply the requirements of the standard in practice.

We support clients across a wide range of sectors with matters including lease identification, lease term assessments, discount rate determination and the implementation of effective lease accounting processes.

For more about how we can help, visit our financial reporting solutions page.

Overview of IFRS 16 ‘Leases’

IFRS 16 ‘Leases’ sets out the accounting principles for the recognition, measurement, presentation and disclosure of leases.

The standard introduced a single lessee accounting model, requiring most leases to be recognised on the balance sheet. Lessees recognise a right-of-use asset, representing their right to use the underlying asset, and a lease liability, representing the obligation to make future lease payments.

Although IFRS 16 is now well established, organisations may still face practical challenges in its application, particularly in identifying leases within contracts, determining appropriate discount rates and managing the ongoing accounting requirements for lease portfolios.

Key areas of focus under IFRS 16

Identifying leases

A contract contains a lease if it conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Assessing whether contracts contain leases, particularly where lease and service components are combined, can require careful judgement.

Lessee accounting

Lessees generally recognise:

A right-of-use asset
A lease liability, measured as the present value of future lease payments

These amounts depend on key estimates such as the lease term and discount rate.

Lessor accounting

Lessors continue to classify leases as either operating leases or finance leases, with different accounting treatments depending on whether substantially all the risks and rewards of ownership are transferred to the lessee.

IFRS 16 insights and publications

IFRS at a Glance – IFRS 16 Leases
A concise “key facts” guide summarising the main requirements of IFRS 16 for both lessees and lessors, including scope, recognition and measurement, key definitions and disclosure requirements.

IFRS in Practice 2024/25: IFRS 16 Leases
A comprehensive publication providing detailed guidance on the application of IFRS 16, including the scope of the standard, accounting requirements for lessees and lessors, and practical examples illustrating the standard in practice.

How we can help

Our specialists support organisations with a wide range of IFRS 16 related matters, including:

Identifying leases and assessing contracts under IFRS 16, which includes consideration of non-lease components and the application of recognition exemptions
Determining lease terms and appropriate discount rates
Estimating the right of use assets and lease liability, which includes how these are subsequently measured
Considering the interplay of IFRS 9 ‘Financial Instruments’ and IFRS 16 with respect to lease modifications and impairment
Structuring the terms of a lease contract so as to obtain a desired accounting outcome
Supporting the implementation of lease accounting processes and systems
Advising on complex lease arrangements and accounting issues and treatments

If you would like to discuss how we can help your organisation navigate the requirements of IFRS 16, please contact our team.

IFRS 16 Leases