IFRS 16. Solved.

What is IFRS 16?
And how does it affect me?

IFRS 16 is the new Accounting Standard for Leases, from the International Accounting Standards Board.

It changes how you must account for all leased assets, and it comes into operation on 1st January 2019.

For those of you who occupy property (as a lessee), or account for those who do, the greatest impact on your accounts will likely be from your property leases.

These must now must be recognised as a liability and a right-to-use asset on the Balance Sheet.

Trace’s complete solution

Our systems can now deal with the complex challenge of calculating the liability and right-to-use asset value on a property lease.

The new IFRS 16 functionality is fully integrated into the core Trace Solutions property management systems and naturally, it specialises in property leases.

Automatic calculation

Our solution automatically calculates the liability and right-to-use asset value of each occupational (head) lease from information already stored in your Trace Solutions property database.

The liability is valued on the Discounted Cash Flow basis.

For existing leases, the system can automatically calculate the transition on either the:

Full retrospective basis:

• calculating from the start of the lease

Modified retrospective basis:

• at the transition date
• with either asset valuation option

The transition calculation takes account of historic rent reviews.

(Sub) Leases

If you grant sub-leases (‘leases’ in Trace core systems) over a substantial part of the occupation, this affects the right-to-use asset and changes the accounting.

The Trace Solutions software handles this special facility within the IFRS 16 property software and reporting.

Periodic financial reports

The periodic financial report performs the liability amortisation and the asset depreciation calculations. It provides:

• Interest
• Rent
• Asset depreciation figures for the Profit & Loss account
• Opening and closing balance figures for the Balance Sheet

The report shows revaluation adjustments with supporting reasons (such as a rent review) and detailed supporting calculations.

The system also supports variable length periods.

Audit reports

Detailed audit reports support all valuations and transition calculations and can be checked before finalisation. The discount rate can be set at lease level. The lease history can be checked and confirmed against external records if required.

Now available

The Trace IFRS 16 solution is now live. If you’d like a demonstration, use the form below. Existing clients should contact their Account Manager.