IFRS 16 + Real Estate

What is IFRS?

IFRS 16 standards published by the "International Accounting Standards Board (IASB)", which became mandatory on January 1, 2019, changed the principles of recognition, measurement and presentation of leases. This standard, which replaces IFRS 17, removes the distinction between operating leases and finance leases for businesses. The measurement for the lessor has not changed, but the lessee is required to determine the "Right of Use" of the leased asset and recognize it on the balance sheet.

Industries Covered by IFRS 16?

This includes companies operating in many sectors such as retail, energy, media, information technology, transportation, healthcare and telecommunications.

IFRS 16 Core Principles of the Standard 

With SAP Flexible Real Estate Management Solution (SAP RE-FX) 

IFRS 16 New Leases Standard

SAP Flexible Real Estate Management enables quick and easy management of complex valuation, depreciation and interest transactions according to IFRS16 standard with standard functions within the solution.

SAP Flexible Real Estate Management Solution ensures that lease contracts are executed on the same system in accordance with legal and IFRS 16 standards and provides a great advantage in operational processes.

• For the lessor, no measurement has changed and the current practice continues. 
• IFRS 16 with SAP Flexible Real Estate Management Solution
• For lessees, the distinction between Operating Leases and Finance Leases has been removed and all leases are treated as finance leases.
• Establishing Master Data Structure under IFRS 16
• Applies to leases longer than 12 months and to assets with a value of more than USD 5000 or EUR 5000, which are currently recognized as fair value based on market conditions.
• Easy Integration with Fixed Assets Module under IFRS 16
• Leases that are a tangible fixed asset and have a fixed lease amount are in scope, but assets such as licenses, leases linked to an index or turnover are excluded.
• Regulation of the Special Depreciation Key under IFRS 16
• Leases of less than 12 months and below a specified value are optionally determined to be recognized in the balance sheet.
• Separate Calculation of Depreciation and Interest under IFRS 16
• Creating a Periodic Depreciation Record Structure Under IFRS 16
• Creating Valuation Parameters for Lease Contracts within the Scope of IFRS 16
• Automatic Calculation of Net Present Value (NPV) of Assets under IFRS 16
• Automating Lease Calculations Under IFRS 16
• Creating Accounting Records According to the Ledger Principle (TPL & IFRS ledger) within the Scope of IFRS16
• Inscope leases are reported in the balance sheet as depreciation and interest expense.

For more information and presentation please contact us via bilgi@prodea.com.tr