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Insights into IFRS 16 – Understanding the discount

Insights into IFRS 16 – Understanding the discount

Our new 'Insights into IFRS 16' series looks at key areas of the new Leasing Standard and aims to assist companies in preparing for the required changes. Our article considers the topical area of ‘Understanding the discount rate’. Under IFRS 16 ‘Leases’, discount rates are required to determine the present value of the lease payments used to measure a lessee’s lease liability. Discount rates are also used to determine lease classification for a lessor and to measure a lessor’s net investment in a lease. In this article we explore the alternative methods prescribed in IFRS 16 to determine discount rates and share our insights to help you understand them.

Insights into IFRS 16 – Understanding the discount

Insights into IFRS 16 – Understanding the discount

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