What IFRS standard governs accounting for leases?

IFRS 16 governs accounting for leases.

The International Accounting Standards Board issued IFRS 16 in January 2016, and it became effective for annual reporting periods beginning on or after January 1, 2019. It replaced IAS 17 Leases and related interpretations, creating a substantially different approach for many lessees.

Under IFRS 16, a lessee generally recognizes a right-of-use asset and a lease liability for leases longer than 12 months, unless an available exemption applies. The liability reflects the obligation to make lease payments, while the asset represents the right to use the underlying item.

The standard introduced a single lessee accounting model, largely eliminating the old operating-versus-finance lease distinction on the lessee’s balance sheet. Short-term leases and leases of low-value assets can qualify for recognition exemptions. Lessor accounting changed less dramatically, so lessors still classify leases as operating or finance leases. IAS 16 instead addresses property, plant, and equipment—not leases.