imported>Doug Williamson |
imported>Doug Williamson |
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| International Financial Reporting Standard 16, dealing with leases.
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| IFRS 16 replaces IAS 17: Leases.
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| IFRS 16 is mandatory - for companies reporting under international financial reporting standards - from 1 January 2019.
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| IFRS 16 requires most lease liabilities to be accounted for 'on balance sheet'.
| | Non-Financial Counterparty. |
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| This change removes the former distinction between [[operating lease]]s and [[finance lease]]s.
| | Non-Financial Counterparties may be exempt under [[EMIR]] from [[central clearing]] and [[collateral]] requirements, depending on the numbers of derivatives transactions they have outstanding. |
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| Broadly speaking, IFRS 16 requires all leases to be recognised on the balance sheet, other than short term leases or those for low value assets.
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| The leases to be brought 'on balance sheet' under IFRS 16 include most operating leases that were 'off balance sheet' under IAS 17.
| | Near Field Communications services. |
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| IFRS 16 leads to increased transparency and improved comparability between companies that lease and companies that borrow to buy assets.
| | A term used in relation to digital and contactless payment systems. |
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| However, for many companies IFRS 16 results in material restatements of their balance sheets and - to a lesser extent - income statements.
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| The main balance sheet impact is to 'gross up' both assets and liabilities by the capital amounts of the leases.
| | == See also == |
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| The main income statement impact is to recognise a greater proportion of total costs in the earlier years of the lease. In other words, cost recognition is 'front-end loaded' under IFRS 16.
| | * [[NFC+]] |
| | * [[NFC-]] |
| | * [[PNFC]] |
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| | | [[Category:Risk_frameworks]] |
| These restatements will normally impact any financial covenant ratios that include ‘debt’, ‘net worth’ or similar indicators, subject to any 'frozen GAAP' provisions.
| | [[Category:Cash_management]] |
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| EBITDA and the interest cover ratio are also likely to be impacted.
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| ==See also==
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| *[[ASU 2016-02 Leases (Topic 842)]]
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| *[[Debt]]
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| *[[DIA]]
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| *[[EBITDA]]
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| *[[Finance lease]]
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| *[[Frozen GAAP]]
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| *[[IAS 17]]
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| *[[Incremental borrowing rate]]
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| *[[Interest cover]]
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| *[[Interest rate implicit in a lease]]
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| *[[Lease]]
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| *[[Operating lease]]
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| *[[Off balance sheet]]
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| *[[Residual value]]
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| *[[Right of Use]]
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| ==Other links==
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| [https://www.treasurers.org/thetreasurer/definitive-guide-to-deriving-ifrs-16-discount-rates Definitive guide to deriving IFRS 16 discount rates: The Treasurer]
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| ==External link==
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| *[https://www.https://www.iasplus.com/en-gb/standards/ifrs-en-gb/ifrs-16 IFRS 16]
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| [[Category:Accounting,_tax_and_regulation]] | |
| [[Category:Compliance_and_audit]] | |
1.
Non-Financial Company.
2.
Non-Financial Counterparty.
Non-Financial Counterparties may be exempt under EMIR from central clearing and collateral requirements, depending on the numbers of derivatives transactions they have outstanding.
3.
Near Field Communications services.
A term used in relation to digital and contactless payment systems.
See also