IFRS 16 (Leases)

IFRS 16 is an accounting standard that requires companies to recognize most leases on their balance sheets. Instead of just noting lease payments as expenses, companies must record a "right-of-use" asset (the leased item) and a lease liability (obligation to pay). This change provides a clearer picture of a company's assets and debts, promoting transparency. It applies mainly to long-term leases, such as office spaces or equipment, and aims to improve financial reporting by showing the true economic commitments involved in lease agreements.