Incremental borrowing rate
Financial reporting - IFRS 16.
The lessee's Incremental Borrowing Rate is a key concept in financial reporting for leases under IFRS 16.
The incremental borrowing rate is the rate the lessee would pay to borrow:
- Over a term similar to the lease term
- With a similar security
When the interest rate implicit in the lease cannot be determined, the IBR shall be used instead, to discount the related lease liabilities and assets for reporting under IFRS 16.
Note that a lessees's incremental borrowing rate is likely to differ from their existing borrowing rate under other borrowing arrangements.