The international accounting standard (effective 2019) requiring lessees to recognize virtually all leases on the balance sheet, functionally equivalent to ASC 842 for U.S. GAAP but applying to IFRS-reporting entities globally.
IFRS 16, issued by the International Accounting Standards Board, eliminated the operating/finance lease distinction for lessees under international standards. Like ASC 842, it requires recognition of a right-of-use asset and lease liability for leases over 12 months, using the present value of future lease payments discounted at the rate implicit in the lease or the lessee's incremental borrowing rate. Key differences from ASC 842 include treatment of variable lease payments and subleases. Multinational companies maintaining real estate portfolios under both GAAP and IFRS require precise lease data — term, rent schedule, extension options — to satisfy both standards simultaneously.
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