IFRS 16 explanation and why it is amended

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IFRS 16 is a new accounting standard that requires lessees to recognize assets and liabilities for all leases on their balance sheets.

IFRS 16 was amended to improve financial reporting transparency and provide a more accurate representation of a company's financial position.
The standard eliminates the distinction between operating and finance leases for lessees, resulting in all leases being recognized on the balance sheet.
Under IFRS 16, lessees must recognize a right-of-use asset representing their right to use the leased asset and a lease liability representing their obligation to make lease payments.
The amendment aims to provide investors and stakeholders with a clearer picture of a company's lease commitments and financial health.
IFRS 16 also simplifies lease accounting by introducing a single lessee accounting model.
Companies are required to disclose more information about their leases in the notes to the financial statements under IFRS 16.

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