IFRS 16 "Lease"

On January 1, 2019, the International Financial Reporting Standard 16 “Lease” will come into force, and significant changes will be made in regard to lessees that keep records of a lease. A unified approach to presentation of transactions under operating and financial leases will be established. A single accounting model considers a lease as a purchase of an asset for attracted financing. The new standard also establishes principles for the recognition, valuation, presentation and disclosure of lease information.

Currently, lessees divide the lease into two types, financial and operational. Each type is related to different accounting rules. Financial leases require recognition of lessee's asset and liability under the lease in the balance sheet. As for operating leases, there is a requirement for disclosure of information in the notes to financial statements.

The application of IFRS 16 will influence virtually all companies that are lessees under the lease. It is expected that a financial position, financial performance and cash flows of a company will significantly change due to the new standard.

The statement of financial position will include the following items under the lease:

• An asset in the form of the right to use an identified asset.
• Lease liability.

• Amortization of an asset in the form of the right to use an identified asset.
• Interest expenses.