The European Commission has endorsed the use of IFRS 16 Leases in EU member states following release of the latest IFRS Standards and amendments update
The new standard will see leases brought on to the balance sheet for the first time and is effective for annual periods beginning on or after 1 January 2019.
IFRS 16 defines how an International Financial Reporting Standards (IFRS) reporter has to recognise, measure, present and disclose leases.
The standard provides a single lessee accounting model, requiring lessees to recognise assets and liabilities for all leases unless the lease term is 12 months or less, or relates to a small item valued at less than $5,000.
Lessors continue to classify leases as operating or finance, with IFRS 16’s approach to lessor accounting substantially unchanged from the earlier standard, IAS 17 Leases.
The consultation with the European Financial Reporting Advisory Group (EFRAG) confirms that IFRS 16 meets the criteria for adoption set out in Article 3(2) of Regulation (EC) No 1606/2002.
The updated EFRAG Endorsement Status Report 9 Nov 2017
Link to the publication in the Official Journal of the European Union: Commission Regulation (EU) 2017/1986