The Shift from IAS 17 to IFRS 16; Analysing Relevant Changes in Financial Statements

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School of Business | Bachelor's thesis
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Date

2023

Department

Laskentatoimen laitos

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Mcode

Degree programme

Laskentatoimi

Language

en

Pages

21 + 4

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Abstract

Leasing is a widely used economic transaction that companies across industries use as an alternative way to finance their investments. The financial reporting of leases has been through significant changes with the introduction of IFRS 16 that required lessees to recognize most leases on their balance sheets, resulting in increased transparency in financial statements. Understanding how the implementation of new IFRS standards affects financial reporting is of high value when analysing a company’s financial position. The impacts of IFRS 16 implementation for lessees have been widely researched both before and after the standard became effective in January 2019. The standard was introduced as an answer to concerns about the former standard, IAS 17, allowing an inadequate disclosure of companies’ assets and liabilities. The purpose of this thesis is to analyse whether IFRS 16 has succeeded in its initial objective of providing more transparent accounting information regarding companies’ lease commitments. The research objective will be met by conducting a systematic literature review where changes brought by IFRS 16 and its effects on the value relevance of accounting information are analysed. As IFRS 16 is still a relatively new accounting standard, better understanding of its impacts on the information presented in financial statements is of high value for their users. This thesis highlights changes on financial statements after IFRS 16 adoption and provides a comprehensive analysis on IFRS 16’s impact on the financial reporting of lease commitments by examining whether the standard has improved value relevance of accounting information.

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Pham, Ly

Keywords

IFRS 16, IAS 17, value relevance, comparability

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https://urn.fi/URN:NBN:fi:aalto-202401211601

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[kand] Kauppakorkeakoulu / BIZ (Open Access)