FRS 116 eliminates the current dual accounting model for lessees, which distinguishes between on-balance sheet finance leases and off-balance sheet operating leases. Instead, there is a single, on-balance sheet accounting model that is similar to current finance lease accounting.

Bringing operating leases on-balance sheet and accounting it like finance lease will make lessees appear to be more asset-rich but also more heavily indebted. The resulting impact on key financial performance indicators may be significant.

IRAS has issued a draft tax guide on lease transactions accounted under FRS 116 as part of the public consultation process in 2017. The draft tax guide includes guidance on proposed tax implications for lessor and lessee accounting models, sub-lease transactions and transition provisions used for accounting purposes.

This session analyses the new lease accounting model, its related tax implications and how it impacts key financial indicators. Further, it assists directors in their oversight role over potential issues such as compliance with debt covenants, tax leakages and impact on earnings and distributable reserves.

CPD Hours : 2

SID Corporate Member may utilise their complimentary vouchers.

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