• Accounting Alert December 2019

IFRS 16 on track for a new lease on life

In a recent article published by Chartered Accountants Australia and New Zealand (CAANZ), Aletta Boshoff, BDO Australia’s National Leader, IFRS Advisory, delves deeper into the impacts that the new leases standard, IFRS 16 Leases, will have on businesses.

Besides the immediate impacts on the financial statements of lessees from capitalising almost all leases on the balance sheet (e.g. poorer debt ratios but improved EBITDA and operating cash flows), there are many broader business implications for boards and management to consider, such as the ability to declare dividends, impact on bank covenants, changes to systems and processes to deal with the new requirements, and which transition method to use, as well as potential tax implications.

Please read the CAANZ article for more information.