Module I· Lease Accounting (IFRS 16 vs. HGB)Intermediate
Question
How does lessee accounting differ from lessor accounting under IFRS 16?
Answer
Mechanics
For lessees, IFRS 16 standardizes the model: almost all leases go on balance sheet as an RoU asset plus a lease liability; operating-lease accounting is gone. For lessors, IFRS 16 keeps the dual model:
- Operating lease (lessor view): The asset stays on the lessor's balance sheet, is depreciated normally, and rental income is recognized as revenue. Standard for landlords and equipment-leasing companies.
- Finance lease (lessor view): The asset is economically transferred to the lessee, and the lessor accounts for it like a sale plus receivable.
Finance-lease classification indicators:
- ownership transfers at the end
- bargain purchase option
- lease term covers most of the useful life, often >75%
- PV of lease payments is close to fair value, often >90%
Deep diveShow more details
Pitch tip
Leasing companies should be valued through the leased-asset pool and spread analysis. A plain EBITDA multiple is often insufficient; use a sum-of-the-parts approach separating operating-lease and finance-lease economics.