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IFRS 16LeasesAccounting Change Advisory Services
Are you ready for the biggest change in accounting for more than a decade?
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kpmg.sk
If you have an operating lease which qualifies (most do), the accounting treatment for it will change significantly
Impact on profit/loss
EBITDA will increase - there will be no operating lease expense which will be replaced by deprecia-tion and interest.
Y - 1 Y - 0 Y + 5
After IFRS 16Before IFRS 16
Cash rental payments
InterestDepreciationLease expense
Impact on balance sheet
Companies with qualifying operating leases will appear to be more asset rich, but also more heavily indebted.
LiabilityAsset
Y - 1 Y - 0 Y + 5
After IFRS 16Before IFRS 16
Key financial ratios impacted
Key financial metrics will be affected changing KPIs (such as EBITDA, EPS and net debt).
EBITDA
Profit/loss
DE
CR
EA
SE
INC
RE
AS
E Balance sheet
Total assetsTotal debt
Ratios
Debt-to-Equity
EPS(in early years)
Net assets Interest coverAsset turnover
+
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How KPMG can help
KPMG can help you not only to comply with the rules, but also explore the opportunities that the new standard IFRS 16 Leases presents. We have a clear methodology based on our global client experience and industry know-how.
IFRS 16 Leases
Further services we can offer:d
Ad-hoc expert support as and when you require.
Lease software solutions, for all levels of client business complexity.
Technical training and workshops so your people know what to expect and how to implement going forward.
Identify contracts in scope.
Model the impact of the initial transition options.
Extract relevant lease information from underlying agreements and assist with key judgements around:
lease term; discount rates; etc.
Establish process to produce accounting entries on an ongoing basis.
Finalize accounting policies and other policies and procedures.
Prepare journal entries, transition financial statements etc.
Initial lease assessment health check including quality of the lease data.
Outcome: modelling and transition options analysis.
Lease portfolio database.
IFRS 16 implementation plan & design.
Fit for purpose process to meet requirements going forward.
Clear accounting strategy for future business leases.
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Phases What we can do Benefit for you
KPMG Slovensko spol. s r. o.Dvořákovo nábrežie 10811 02 Bratislava
T: +421 2 5998 4111E: [email protected]
kpmg.sk
For more information visit our website: kpmg.com/ifrs16
OUR PUBLICATIONS
© 2019 KPMG Slovensko spol. s r. o., a Slovak limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Printed in Slovakia.
Miroslava Plevová IFRS 16 Manager
E: [email protected] T: +421 918 662 219
