THE IMPACT OF IFRS 16 ON LESSEE'S FINANCIAL REPORTING.

The adoption of IFRS 16 in January 2019 brought significant changes to the way lessees recognise, measure, present, and disclose leases, making it one of the most revolutionary accounting standards in recent years. Before 2019, companies that used operating leases to finance their assets were not required to report these assets or liabilities based on leases in their balance sheets. This accounting model raised concerns about the credibility of key business indicators and the reliability of financial information for stakeholders. IFRS 16 introduced a single lessee accounting model requiring recognition of assets and liabilities for leases longer than 12 months unless the underlying asset is of low value. This approach replaces the previous practice of classifying each lease as an operating or a finance lease, which can significantly affect the lessees' financial statements. This change may raise the company's overall debt, affecting its creditworthiness and financial stability. The purpose of the disclosures in IFRS 16 is to provide information in the Notes that, along with the information in the Statement of Financial Position, Statement of Profit or Loss, and Statement of Cash Flows, allows users to assess the impact of leases. This means that the lessee's financial statements now provide more accurate and relevant financial information, resulting in increased usefulness. The objective of financial reporting is to provide useful financial information about the reporting entity to existing and potential investors, lenders, and other creditors, helping them make decisions regarding providing resources to the entity. Now, users of financial statements can make different decisions compared to the previous period when lessees were not required to show leases in their Statement of Financial Position. Users must have access to accurate information regarding a company's indebtedness, as any exclusion or inaccurate presentation of such information may impact the decisions made by users based on financial information about a particular reporting entity. Leases are a significant source of external financing for companies, so it's interesting to see how the adoption of IFRS 16 has influenced the financial statements and significant financial indicators of lessees. [ABSTRACT FROM AUTHOR]