Question
The implementation of AASB 16 has significantly changed reported results however does not have any economic impact on the company, its cash flows, debt covenants
The implementation of AASB 16 has significantly changed reported results however does not have any economic impact on the company, its cash flows, debt covenants or shareholder value. The impact on transition and going forward is summarised as follows, with a reconciliation between reported results and underlying results excluding the impact of the new standard included on the following pages:
According to the following information, what was the impact on cash flow of the new lease accounting standard AASB 16? Why?
Item | Impact |
Profit and Loss | EBIT and EBITDA increase as a result of operating lease expenses being replaced by depreciation and interest, with NPAT decreasing |
Balance Sheet | Recognition of Right of Use Asset and Lease Liability. Impact on balance sheet on transition at 1 July 2019: Total Assets increased by $138.4m Total Liabilities increased by $138.4m, comprised of the recognition of lease liabilities of $143.6m, offset by the derecognition of existing lease provisions of $5.2m Net Assets not impacted |
Cash Flow |
|
Adoption Date and Comparatives |
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