Clarification on Changes in the Accounting Treatment of Lease Contracts (IFRS 16)
| No: 381000099758 | Date(g): 17/6/2017 | Date(h): 23/9/1438 | Status: Guidance |
Translated Document
Referring to the review conducted by the International Accounting Standards Board (IASB) and the Financial Accounting Standards Board (FASB) in 2016 regarding the accounting treatment of lease contracts, which resulted in the issuance of "International Financial Reporting Standard No. 16 - Leases" and the update of Accounting Standards No. 2016-2, which will be effective from January 1, 2019, for establishments with fiscal years ending on that date, with the possibility of early application of the two standards.
We would like to inform you that both standards require the recognition of lease contracts in the financial statements, with lease payments recorded as liabilities on the balance sheet, while the right-of-use assets are recorded as assets.
Given the many inquiries regarding these standards, the Basel Committee on Banking Supervision has reviewed the frequently asked questions (FAQs) and published their answers in April 2017. Therefore, SAMA emphasizes the importance of reviewing the questions and answers on the Bank for International Settlements website.