Accounting for lease: what you need to know

Introduction

This standard on Leasing is addressed to all companies that have/are entering in leasing agreements, to ensure compliance with the IFRS requirements effective from January 2019.
Mostly impacted will be the lessees with operating leases under current standard. The new accounting treatment could affect a number of areas:

• Significant impact on a range of key metrics monitored by stakeholders, like EBITDA, EPS, net assets, gearing ratios
• Debt covenants – ratios might need to be renegotiated
• Share-based payments– performance metrics might need renegotiation
• Dividend policy – the revised profile of the profit or loss expense might affect the ability to pay dividends
• Lease negotiations – although accounting should not be the key driver in commercialnegotiations, market behaviour might change towards shorter lease tenures to minimize lease liabilities.

Objectives

By the end of this session, participants will be able to:

• understand the new business perspective and the main changes brought by the new standard IFRS 16;
• determine how these changes affect not only the accounting systems, but also their business model and relationships;
• identify the main differences between leasing and other service contracts;
• list the main elements a lessee has to consider in recording/ accounting for a lease contract;
• understand what are the exemptions and the impacts in taking advantage of them;
• identify what are the steps to be further taken to get ready on time for the challenges and opportunities brought IFRS 16.

• Scope of the standard
• New definition of leasing and how I correctly identify a leasing contract
• Accounting model for lessee
• Insights to approach more complex areas
• Available exemptions
• Timeline and options for implementation

This training is coordinated by Philippe Foerster, Lead Partner of IFRS Learning Solutions of PwC Luxembourg. It will be animated by experts of PwC Luxembourg daily involved in the implementation of the IFRS norms.

Philippe Foerster is the IFRS leader for PwC Luxembourg and is a partner in the Assurance practice.

Philippe has over 18 years experience in serving financial and multinational institutions providing audit and advisory services. He is part of the PwC Global Accounting and Consulting Services (GACS) and is a partner specialised in accounting for financial instruments and consolidation under IFRS. He is member of several PwC international IFRS working groups: GACS, Financial Instruments Topical Team (FITT) and Corporate Treasury Technical Committee (CTTC). He participated in the elaboration of our global guide: hedge accounting in practice.

Philippe graduated from HEC-University of Liège-Belgium. He is a qualified “réviseur d’entreprises” in Luxembourg.