IFRS 16 - Leases: Analyse af de regnskabsmæssige udfordringer interessenterne ser ved implementering af IFRS 16

Daniyal Hussain & Ekram Hussain

Student thesis: Diploma thesis


The thesis is about leases and the accounting process under the current standard IFRS 16. The report will highlight challenges following the implementation of IFRS 16 and the derived impact for the users of the financial report.
As leasing has become a more attractive form of financing for companies to procure its assets, some challenges have been insulated and criticized by the users of the financial report regulated after IAS 17. This is characterized by the fact that the lessee has too many options in relation to the accounting treatment of leasing and that this is not transparent with the users of the financial reporting.
The current standard IFRS 16 aims to provide a more accurate picture of the financial reports. This is in order to make a more credible presentation of the companies assets and liabilities, increase the transparency, improve the stability of companies that lease their assets and companies that finance their assets themselves, and eliminate the need for investors, credit rating agencies, etc. to make adjustments to the financial reporting. This means that the majority of leases will be included in the balance sheet of the lessee's financial report, which will increase the comparability between companies. However, IFRS 16 provides some exceptions for short-term leases and low-value assets that may reduce the comparability to a limited extend.
The thesis starts out by defining the concept of leasing and elucidating developments from statistics. Subsequently, based on interviews and analysis, some challenges have been identified where an in-depth of these has been carried out. Some of the challenges identified in the current standard as being particularly notable, that larger estimate recognizes into the balance sheet related to lease contracts that are defined as infinite. This leads in the thesis to a discussion whether such a large estimate can give a more accurate picture of the financial report.
Furthermore, there are challenges related to options when contracting, as a lessee must consider whether an option will utilizes at the start of the lease period. In addition, during the respective lease period, the lessee shall determine, whether there are significant conditions indicating a possible extension of the lease term. This can be quite resource demanding for the lessee, which is why this leads to a discussion about the utility of implementing IFRS 16. The form pin with this master thesis is to identify the issues that have occurred during and after the implementation of the current standard IFRS 16, in the lessee's financial statements.

EducationsGraduate Diploma in Accounting and Financial Management, (Diploma Programme) Final Thesis
Publication date2020
Number of pages94
SupervisorsCaroline Aggestam Pontoppidan