The introduction of the new lease accounting standard, IFRS 16, is due to have a significant impact on any company which relies upon material operating leases as part of its day to day business activities.
The changes will affect many companies, through:
- an alteration in property strategy
- incentives to restructure leases
- an increase in reported leverage (which could impact on covenants and borrowing costs)
- a reduction in liquidity ratios, changing investor perception on solvency
- a decrease in profitability ratios
- a reduction in reported equity
IFRS 16 comes in to effect from 2019. The transition will be complex and will take time to prepare. We recommend that you take action now. GVA has an expert team, dedicated to helping you navigate the changes and mitigate the impact on your organisation.
IFRS 16: Lease accounting changes
Please download our IFRS 16 Lease Accounting Changes thought leadership report to understand more fully the changes and the impact they may have for your business.
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