Adviser alert – Insights into IFRS 16 – Definition of a lease

The Grant Thornton International IFRS team has published Insights into IFRS 16 – Definition of a lease.

The Insights into IFRS 16 series provides insights on applying IFRS 16, Leases, in key areas. Each edition will focus on an area of IFRS 16 to assist you in preparing for the required changes on adoption of the standard.

The edition Insights into IFRS 16 – Definition of a lease provides guidance on the definition of a lease.

The issue

IFRS 16 changes the definition of a lease from the current evaluation in IFRIC 4, Determining whether an Arrangement Contains a Lease, and provides guidance on how to apply this new definition. As a result, some contracts that do not contain a lease today will meet the definition of a lease under IFRS 16, and vice versa.

The bulletin explains the new lease definition and the three key evaluations necessary to determine that the contract is or contains a lease.