EFRAG has published its Draft Comment Letter (‘DCL’) on the IASB’s Request for Information (‘RFI’) IASB/RFI/2025/1 Post-implementation Review (‘PIR’) of IFRS 16 Leases (‘IFRS 16’ or ‘the Standard’).
In the DCL response, EFRAG notes that the Standard is generally working well, especially for straightforward lease agreements, and has largely met its objective of improving lease-related financial reporting. However, there are some potential areas for targeted improvements of the Standard. EFRAG raises conceptual issues regarding the presentation and disclosure of cash flow information.
EFRAG also highlights application issues regarding whether some contracts fall within the scope of IFRS 16, particularly in relation to certain intangible assets such as software licences and cloud computing services, as well as the complexity of distinguishing between a lease and an in-substance purchase.
Lastly, EFRAG raises issues related to the interactions between IFRS 16 and other IFRS accounting standards, specifically for distinguishing between lease modifications under IFRS 16 and lease liability extinguishments under IFRS 9 Financial Instruments and in relation to the interaction with IFRS 15 Revenue from Contracts with Customers on sales and leaseback transactions.
The deadline for submitting comments on EFRAG’s DCL is 30 September 2025, via the official submission form.
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