Interest rate implicit in a lease

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Financial reporting - IFRS 16.


The Interest Rate Implicit in a lease is a key measure for financial reporting for leases under IFRS 16.

This is the internal rate of return of the lease cash flows, including the capital value of the leased asset.

If the IRI is determinable, then IFRS 16 requires the IRI to be used as the discount rate for calculating related lease liabilities and assets for reporting under IFRS 16.

If the IRI is not determinable, the lessee's Incremental borrowing rate must be used instead.

See also