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IFRS 16 and its Impacts on Aviation Industry

Author

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  • Alžběta Veverková

    (Department of Accounting and Taxes, Faculty of Business and Economics, Mendel University in Brno, Zemědělská 1, 613 00 Brno, Czech Republic)

Abstract

Current differences between the accounting models for a financial and an operating lease and their critics from the users of the financial statement forced the IASB issued a new Leases Standard, IFRS 16, which supersedes IAS 17 Leases and its related interpretations in January 2106. IFRS 16 will eliminate dual accounting model for lessees and it is assumed to have significant business implications, especially from lessee's point of view. The paper focuses on quantification of the impact of IFRS 16 on selected financial statement items and financial analysis ratios of fifteen European airlines. The research is also concerned with comparison of the article outputs with the previous cases studies. The paper confirmed that lease capitalization under IFRS 16 will have a material impact on the reported numbers in the balance sheet and income statement and result in significant changes to return and leverage ratios.

Suggested Citation

  • Alžběta Veverková, 2019. "IFRS 16 and its Impacts on Aviation Industry," Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis, Mendel University Press, vol. 67(5), pages 1369-1377.
    • Handle: RePEc:mup:actaun:actaun_2019067051369
    DOI: 10.11118/actaun201967051369
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    References listed on IDEAS

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    1. Rolf Uwe Fülbier & Jorge Lirio Silva & Marc Henrik Pferdehirt, 2008. "Impact of Lease Capitalization on Financial Ratios of Listed German Companies," Schmalenbach Business Review (sbr), LMU Munich School of Management, vol. 60(2), pages 122-144, April.
    2. Joanne C. Duke & David Franz & Su‐Jane Hsieh, 2012. "Evaluating Constructive Lease Capitalization and Off‐Balance‐Sheet Financing: An Instructional Case with FedEx and UPS," Accounting Perspectives, John Wiley & Sons, vol. 11(1), pages 57-69, May.
    3. Vivien Beattie & Keith Edwards & Alan Goodacre, 1998. "The impact of constructive operating lease capitalisation on key accounting ratios," Accounting and Business Research, Taylor & Francis Journals, vol. 28(4), pages 233-254.
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