Impacts of adoption of IFRS 16 in a brazilian company

Abstract

In 2016, the IASB published IFRS 16, a new lease standard that replaces IAS 17. In this context, this study sought to identify the main regulatory changes resulting from the adoption of IFRS 16 using Petrobras’ financial statements as an example to determine the main impacts on the financial statements and the economic-financial indicators. Are also provided the comments made by the IASB and the accounting community regarding these changes. The findings showed that the new standard will bring several changes that will generate impacts, some small and others that can be expressive. IFRS 16 will change the leasing contracts valuation, as well as it´s recognition and disclosure. The main one is that operating leases will cease to be off-balance sheet information, leading to an increase in assets, liabilities and depreciation and financial expenses on profit and losses accounts, which were previously unaffected by this type of operation. As a consequence of these variations, it was identified that the economic-financial indicators will also change. Liquidity and return indicators on assets will suffer reductions in their values, while indexes such as fixed assets, EBITDA and the ratio of third-party capital to equity will present positive changes. Thus, these changes may require companies to re-evaluate and renegotiate clauses related to the level of covenant, as well as borrowing costs.