Here are the criteria for recognising leases in the balance sheet
Is the lease in practice an investment? If the lease fulfils 1 of 4 criteria, it will probably be recognised in the balance sheet.
A major survey conducted by KPMG shows that companies all over the world are struggling to comply with the requirements set out in IFRS 16, and that the selection and implementation of software are among the biggest concerns.
Do you have more than 50 employees in Denmark, Sweden or Norway? If so, there is a good chance that your leasing contracts should be dealt with as investments in the accounts. This means that all departments that enter into such contracts should have a chat with the finance department.
With IFRS 16, the CFO must have full control over all of the company’s lease agreements. The time is about to run out for companies that are not in progress with the preparations for IFRS 16 – the new accounting standard for lease agreements. In most cases, the implementation creates significant business-related, practical and theoretical challenges for the CFO and their colleagues.