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ARTICLE · 25 JANUARY 2019

How Does Impairment Look Under IFRS 16 Leases?

KPMG Luxembourg
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As we've seen over the last few months, IFRS 16 has brought about a lot of changes to the existing treatment of leases, especially for lessees

LuxembourgFinance and Banking
Katerina Buresova
Katerina Buresova
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As we've seen over the last few months, IFRS 16 has brought about a lot of changes to the existing treatment of leases, especially for lessees. Probably everyone, even if not significantly affected by this accounting standard, remembers at least the most important change: in many cases the lessees will now have to recognize their operating lease on balance sheet which means to record a right-of-use (ROU) asset and a lease liability. "What's so difficult about that?" you may ask. But this new accounting treatment has several not-so-obvious impacts that reveal themselves along the way... impairment of the ROU assets following IAS 36 is one of them.

Does it mean I have to test for an impairment?

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