IFRS 16 and Its Impact on Asset Valuations

Understanding IFRS 16

IFRS 16 has fundamentally changed how leases are recognised on balance sheets. For valuers, this means adjusting approaches to reflect right-of-use assets and lease liabilities in fair value assessments.

Practical Implications

Organisations with significant lease portfolios — particularly in real estate and equipment — must now consider the impact on net asset values, debt covenants and financial ratios. Valuation professionals need to account for these changes when preparing reports for financial reporting purposes.