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What is AASB 16 - Leases?

AASB 16 is a new accounting standard that changes the way leases are accounted for on a company’s balance sheet. Under the new standard, obligations to make future payments on an operating lease must now be included on the balance sheet. This will impact your EBIT, EBITDA, and cash flow. All businesses will be affected to some extent.

What does this mean for my business and balance sheet?

Your balance sheets will need to be changed:

  • Rent is no longer an operational expense

  • EBITDA & EBIT will be affected

  • Cash flow will be presented in a new way

AASB 16 affects more than your balance sheet, there are also wider implications for businesses:

  • More companies may require an audit

  • Mergers and acquisitions may be more challenging

  • Banking covenants may be harder to comply with
  • Changes to EBITDA may be significant
  • Effects on systems and data

Next steps...


Learn more about AASB 16:

Summary of the new standard AASB 16
Effects of the new leasing standard
A new approach to lease accounting
Determination of whether contracts contain a lease
What is part of the leasing contract

For more information on AASB 16 - Leases, please contact your local RSM Audit & Assurance adviser.