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Transition from IAS 17 to IFRS 16

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Last updated: 20 January 2019

IFRS 16 introduces a few practical expedients at the date of its application and transition from IAS 17 as Join IFRScommunity Forum!
discussed below.

 Contents 
De nition of a lease on initial application
 De nition of a lease on initial
application
Entities are permitted not to reassess whether their contracts that are in force at the date of initial  Modi ed retrospective application
application of IFRS 16 are leases (or contain leases). Instead, IFRS 16 can be applied to contracts identi ed  Leases previously classi ed as
operating leases
as leases under IAS 17 and IFRIC 4 (IFRS 16.C3-C4).

Disclosure on initial application
 Sale and leaseback transactions on
initial application

Modi ed retrospective application 

Amounts previously recognised in
respect of business combinations
 More about IFRS 16
Lessees are relieved from full retrospective application as speci ed in IAS 8. Instead, a so-called
‘modi ed retrospective’ approach can be used. Under this approach, comparative data is not restated and
the cumulative e ects of applying IFRS 16 are recognised at the date of initial application of IFRS 16 as an
adjustment to the opening balance of equity (IFRS 16.C5-C7).

Leases previously classi ed as operating leases

Leases previously classi ed as operating leases should be recognised under a modi ed retrospective
application as described in paragraphs IFRS 16.C8-C9. Additional practical expedients are included in
IFRS 16.C10.

Disclosure on initial application

Application of IFRS 16 using the modi ed retrospective method goes with an attached requirement to
reconcile the operating lease commitments disclosed under IAS 17 and lease liabilities recognised on
initial application of IFRS 16 (IFRS 16.C12).

Sale and leaseback transactions on initial application

As noted earlier, IFRS 16 has speci c provisions for sale and leaseback transactions. Transition
requirements for these transactions are set out in paragraphs IFRS 16.C16-C18.

Amounts previously recognised in respect of business

combinations

Before IFRS 16, IFRS 3 required to recognise as separate assets/liabilities favourable or unfavourable
terms of an operating leases acquired in a business combination. On transition to IFRS 16, these
assets/liabilities should be derecognised and their amount should adjust the carrying amount of the
right-of-use asset (IFRS 16.C19).

More about IFRS 16

See other pages relating to IFRS 16:

Scope of IFRS 16
Identifying a Lease
Lease Term
Recognition and Measurement of Leases
Lease Modi cations
Sale and Leaseback Transactions
Presentation and Disclosure
Lessor accounting
Transition from IAS 17 to IFRS 16

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