Do you lease premises? Machinery? Vehicles? And report under NZIFRS?

NZIFRS 16 Leases applies for periods beginning on or after 1 January 2019 so therefore applicable for 31 December 2019 balance dates and forward.

If your business reports under NZIFRS, irrespective of whether you are audited or not, you will be required to book your operating leases.  This new requirement applies for the period beginning on or after 1 January 2019, although early adoption is permitted.

IFRS 16 requires nearly all entities to recognise a right to use asset and an offsetting lease liability. For example, instead of recognising rent expense, the cost of the lease will flow through the profit and loss as amortisation and interest. This is not a simple calculation.

Our colleagues at Moore Stephens Australia in conjunction with Thomson Reuters, have developed a series of models to help calculate and apply the new NZIFRS 16/AASB 16 Lease standard. These effectively deal with the transition and ongoing treatment of leases previously classified as operating leases. They even calculate the profit and balance sheet effects of the different adoption options available. Check it out here.

To assist our clients with the successful implementation of this treatment, we offer this cost-effectively priced software for purchase. Contact your Markhams advisor if you would like to learn more.