IFRS 16

IFRS 16 is the international accounting standard on leases, effective from 1 January 2019, that requires a lessee to put almost all leases on the balance sheet as a right-of-use asset and a lease liability. It removed the old operating-lease off-balance-sheet treatment, so a charterer on a long time charter or bareboat now recognizes the discounted lease payments as debt and depreciates the asset. Short-term leases under 12 months and low-value assets are exempt. For shipping it lifted reported leverage at companies that chartered in tonnage, changing covenant headroom and how analysts read the accounts.