Objective of the standard

Learning objectives

• Explain the objective of IFRS 16: information that faithfully represents leases for lessees and lessors, enabling users to assess their effect on financial position, financial performance and cash flows.L1

Normative references

• IFRS 16 §1IFRS 16 sets out the principles for the recognition, measurement, presentation and disclosure of leases. The objective is that lessees and lessors provide relevant information that faithfully represents those transactions, giving users of financial statements a basis to assess the effect of leases on the entity's financial position, financial performance and cash flows.
• IFRS 16 §2In applying the standard, the entity considers the terms and conditions of contracts and all relevant facts and circumstances. It applies the standard consistently to contracts with similar characteristics and in similar circumstances.

Original summaries of the paragraphs (reference register), never a quotation of the standard.

8 questions

• IFRS 16 sets out principles intended for both lessees and lessors, not for lessees only.L1
• IFRS 16 deals only with the recognition and measurement of leases; their presentation and disclosures are governed by other standards.L1
• According to its objective, the information produced under IFRS 16 must enable users of financial statements to assess the effect of leases on which aspects of the entity?L1
• Ardelis applies IFRS 16 to its leases. What must it rely on to apply the standard to a given contract?L1
• An entity applies IFRS 16 consistently to contracts with similar characteristics and in similar circumstances.L1
• Tremora leases two identical warehouses, under identical terms, in the same logistics area. It may apply IFRS 16 differently to each of the two contracts if this improves its gearing ratio.L1
• For which aspects of the treatment of leases does IFRS 16 set out principles?L1
• Which quality does the objective of IFRS 16 expect from the information provided by lessees and lessors about their leases?L1