Understanding the challenges in IFRS 16 / Ind AS 116 Lease calculations using spreadsheets
Executive Summary Since April 2019, due to the introduction of IFRS 16 / Ind AS 116 – Leases, there has been a significant change in how leases are accounted for, especially by the lessees. As per the earlier leasing standard, lessees were required to account for lease transactions as operating or finance leases depending on the rules and tests of classification. As per the new leasing standard, this classification is done away with, and lessees are now required to recognize nearly all leases (except short-term and low-value leases) on the Balance Sheet which will reflect their Right-to-use an asset for a period of time and the associated lease liability for rent payments. The accounting of operating leases as per the earlier standard was relatively straightforward, which required lessees to recognize lease payments as operating lease expenses on a straight-line basis over the lease term. The accounting of operating leases as per the earlier standard was relatively st...