The Transition from IAS 17 to IFRS 16 and Its Impact on the Usefulness of Financial Information
Abstract
In January 2016, the International Accounting Standards Board issued a new standard for lease accounting: International Financial Reporting Starndard (IFRS) 16. The new principle of IFRS 16 brings essential changes against the previous standard IAS 17 including canceling the classification of operating lease and finance lease and requiring to capitalize every lease-related activity on financial statements. Since lease accounts for a large proportion of business transactions of many enterprises, the essay evaluates the impact of lease standard switch from IAS 17 to IFRS 16 by adopting two methodologies of literature review and case study. There are three issues analyzed, first, the major differences in definition, classification and measurement aspects. Second, the change of financial statements and specific financial ratios based on the annual report in 2022 of Tesco. Third, the usefulness of financial information under IFRS 16 from the perspective of auditor, investor, analyst and lessee respectively.
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DOI: http://dx.doi.org/10.18686/fm.v8i1.7895
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