The new leases standard: part 1

AASB 16 Leases became mandatorily effective for annual reporting periods beginning on or after 1 January 2019 and brings significant change to lease accounting for lessees as most leases will now need to be recognised on a lessee’s balance sheet. Ascertaining whether an arrangement is, or contains, a lease is therefore a critical assessment that entities will have to complete and document. In many cases this assessment will be straightforward and an arrangement that is a lease under the superseded AASB 117 Leases and IFRIC 4 Determining Whether an Arrangement Contains a Lease, will be a lease under the new standard. In other cases, the assessment may be more complex and require the application of judgement.

This is the first instalment of a series of publications aimed at breaking down the new leases standard which is detailed and complex. Each instalment will focus on and summarise a key area of AASB 16, with this first instalment being all about assessing whether an arrangement is, or contains, a lease.

Read our other instalments: