Step 1: Assess your contracts
Go through them all to establish identified assets and whether you have the right to all the economic benefits they yield. If you don’t, it may not be considered a lease.
Step 2: Review your lease terms
IFRS 16 provides an exemption for leases 12 months or longer. See how many of your leases are exempt.
Step 3: Prepare your calculations
It’s tedious work, but it’s important work if you want to determine the impact IFRS 16 has on budgets, cashflow and EBITDA.
Step 4: Adjust all journal entries
After all calculations, you must then adjust all journal entries related to lease liabilities.
Step 5: Build an IFRS transition team
Becoming IFRS compliant will require additional time and resources to implement and maintain, including stakeholder and employee training for initial adoption and maintenance.
Step 6: Reassess your financial position
IFRS compliance could change the value of your business. This is important if you’re thinking of borrowing money, bringing on investors/partners or just want to know where you stand.