FEATURES OF RENTAL ACCOUNTS IN TRANSPORT ENTERPRISES UNDER IFRS 16

Abstract

The article deals with the features of the definition of the lease as an object of accounting under the new rules. IFRS 16 "Leases" comes into effect on 01.01.2019, so today the tenant is obliged to recognize practically all lease transactions in the balance sheet to reflect their right to use the asset during the relevant period and their payment obligations. Transport companies rent or lease a significant number of high-value objects, including cars, aircraft, vessels, parts of the port and logistics infrastructure, offices, warehouses, and navigation facilities. Therefore, transport companies that use the IFRS as tenants will feel the greatest impact of the new standard on lease. Enterprises will have to undertake a deep analysis of the changes and assess their impact on the financial ratios and performance indicators, the terms of credit agreements, business operations, the capabilities of information systems accounting and control, and their compliance with the requirements of the implementation of IFRS 16 "Leases". The new standard leads to an increase in assets and liabilities in the statement of financial position, as well as in the presentation of data in the statement of income or other comprehensive income, and in the statement of cash flows. The main essence of the innovations: the lessees recognize the asset under the model "right to use" and the obligation at the time of the beginning of the rental relationship, all lease relations are assessed on the basis of evaluation of terms of lease. Lease costs are replaced by depreciation and interest expense in the income statement, similarly, as the finance lease was reflected until the adoption of the new standard. All this leads to the recognition of rental costs at the initial stage of the lease, which may mean a reduction in revenues and a reduction in the equity of transport companies immediately after the commencement of the lease compared with the data when accounting for operating leases to IFRS 16 "Leases".