Investigation of IFRS16 Effect on the Airlines
Journal of Finance and Accounting
Volume 7, Issue 5, September 2019, Pages: 132-135
Received: Aug. 10, 2019; Accepted: Aug. 24, 2019; Published: Sep. 9, 2019
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Jin Yu, Business School, Chengdu University of Technology, Chengdu, P. R. China
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Under IAS17, operating leases can be reported in the notes of financial statements, so operating leases are not recognized in statements of financial position, and the lease payments are recognized as expenses and recorded in statements of profit and loss. Therefore, operating leases have the nature of off-balance sheet, and keeping operating leases off of the balance sheet has been the veil of the true nature of a company’s liabilities. To increase the transparency of company’s lease liabilities, IFRS 16 changes the way that lessees disclose operating leases in their financial statements. and relevant financial ratios including debt to asset ratio, asset turnover ratio and EBITD will also change. PwC, Deloitte, KPMG and Ernst & Young provide guides to help companies execute the new accounting standard, and they foresee that some industries will be influenced on the basis of the degree of dependence on operating leases. This paper will compare the accounting treatment of leases in IAS17 and IFRS16, and the impact on airlines will be analyzed from financial statements and financial ratios. For operating leases, the advantage of off-balance sheet will disappear, so Airlines that rely heavily on operating leases should consider the impact of lease capitalization on their businesses.
Lease Accounting, IAS17, IFRS16
To cite this article
Jin Yu, Investigation of IFRS16 Effect on the Airlines, Journal of Finance and Accounting. Vol. 7, No. 5, 2019, pp. 132-135. doi: 10.11648/j.jfa.20190705.11
Copyright © 2019 Authors retain the copyright of this article.
This article is an open access article distributed under the Creative Commons Attribution License ( which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.
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