The IFRS 16 disclosure requirements for lessees are as follows:

Objectives

IFRS 16, paragraph 51, provides that the objective of the disclosures is for lessees to disclose information in the notes that, together with the information provided in the statement of financial position, statement of profit or loss and statement of cash flows, gives a basis for users of financial statements to assess the effect that leases have on the financial position, financial performance and cash flows of the lessee.

IFRS 16 Disclosure Requirements for Lessees

A lessee shall disclose the following amounts for the reporting period:
(a) Depreciation charge for right-of-use assets by class of underlying asset,
(b) Interest expense on lease liabilities,
(c) The expense relating to short-term leases. This expense need not include the expense relating to leases with a lease term of one month or less,
(d) The expense relating to leases of low-value assets accounted for applying paragraph 6. This expense shall not include the expense relating to short-term leases of low-value assets included in paragraph 53(c),
(e) The expense relating to variable lease payments not included in the measurement of lease liabilities,
(f) Income from subleasing right-of-use assets,
(g) Total cash outflow for leases,
(h) Additions to right-of-use assets,
(i) Gains or losses arising from sale and leaseback transactions, and
(j) The carrying amount of right-of-use assets at the end of the reporting period by class of underlying asset.

Additional Disclosure Requirements for Lessees

In addition to the disclosures mentioned above, IFRS 16, paragraph 59, provides that a lessee shall disclose additional qualitative and quantitative information about its leasing activities necessary to help the users of financial statements to assess the effect of leases on the financial position, financial performance, and cash flows.

This additional information may include, but is not limited to:

(a) The nature of the lessee’s leasing activities;
(b) Future cash outflows to which the lessee is potentially exposed that are not reflected in the measurement of lease liabilities. This includes exposure arising from:
(i) Variable lease payments;
(ii) Extension options and termination options;
(iii) Residual value guarantees (as described in paragraph B51); and
(iv) Leases not yet commenced to which the lessee is committed.
(c) Restrictions or covenants imposed by leases; and
(d) Sale and leaseback transactions.

Next Lesson – Lease Accounting Example – Transfer of Title to a Lessee