Overview

IFRS 16 is an international accounting standard that regulates the accounting treatment of leases and has been applicable since January 1, 2019. Its application requires that leases be recognized through a right-of-use asset and a lease liability, which means that the lease is treated similarly to the purchase of an asset financed through borrowing.

The NPS enhancement for IFRS 16 simplifies the creation and tracking of contracts, schedules, and fixed assets in accordance with the standard. This guide introduces the functionalities provided by the enhancement, including:

• Creating a contract as the main carrier of the schedule by monthly installments, with a clear distinction between principal and interest,

• Calculating the present value of the schedule for the fixed asset,

• Creating a fixed asset directly from the contract, with a clear indication that the asset is linked to a specific IFRS 16 contract,

• Automatic posting and reversal of monthly schedules,

• Changing the interest rate after a certain period and generating a new version of the schedule for the same contract,

• Summary and periodic statistics displaying paid liabilities (long-term and short-term), interest, and lease expenses based on the schedule.