Adviser alert – Insights into IFRS 16 – Understanding the discount rate

The Grant Thornton International IFRS team has published Insights into IFRS 16 – Understanding the discount rate.

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.

This first edition provides guidance on the determination of the discount rate.

The issue

Under IFRS 16, discount rates are required to determine the present value of the lease payments used to measure a lessee’s lease liability. Discount rates are also used to determine lease classification for a lessor and to measure a lessor’s net investment in a finance lease.

This bulletin explores the different methods prescribed in IFRS 16 to determine discount rates and presents insights to help you understand them.