IFRS 16 Leases is approaching fast, and if you lease forklift trucks in your business, the way you report your finances will have to change after the deadline on 1 January 2019.
Some preparation in your company will be required before and after the implementation, because while nothing may change in the day-to-day running of your materials handling operation, the figures on your balance sheet will be affected.
Currently, operating lease payments are recorded as a basic expense, just like electricity bills. With IFRS 16 Leases, these leased trucks will have to be listed as an asset, as if you actually owned them. This will make the company's debt ratio appear higher, which could be a cause for concern.
The best way to prepare for the new IFRS is to review and analyse your company's records, to see what the impact would be and to find out what figures you will need to start reporting. By considering factors like the length of your lease, your own estimated borrowing rate and the payments you make, you can figure out the value of these assets and other figures you will need after the change.
We've created a calculator to make this job much easier - by entering some basic information about your current leasing contract, the calculator will give you an estimate of the asset value, the total interest you will pay, and the total service expense over the length of your contract, in your chosen currency. In other words, all of the information you will have to start reporting when IFRS 16 Leases comes into effect.
Click the button below to go to the calculator - you'll also be able to get your results emailed to you in an Excel sheet, so your company can start preparing for next year.