Close & reporting
Lease accounting (ASC 842 / IFRS 16)
Leases brought onto the balance sheet as a right-of-use asset and lease liability under IFRS 16 for a Canadian company reporting under IFRS, with monthly amortization tracked going forward; ASPE, which most private Canadian corporations use, does not require this on-balance-sheet treatment at all.
Management report
Illustrative client · August 2026
CAD
| Line | Aug | Jul | |
|---|---|---|---|
| Revenue | 142,380 | 131,904 | +10,476 |
| Cost of sales | (51,260) | (48,115) | (3,145) |
| Gross profit | 91,120 | 83,789 | +7,331 |
| Payroll | (46,300) | (45,900) | (400) |
| SoftwareNoted | (6,480) | (5,490) | (990) |
| Rent | (8,000) | (8,000) | 0 |
| Other operating | (9,215) | (9,870) | +655 |
| Net income | 21,125 | 14,529 | +6,596 |
Reviewer's note
Software is up on last month after two seats were added mid-month. Revenue includes one milestone invoice that will not repeat next month.
Illustrative. An example of the document, not a client's figures.
The choice starts with your standard, not your lease
ASPE, the default for most private Canadian corporations, largely keeps operating leases off the balance sheet, close to the older treatment IFRS abandoned. IFRS 16 requires almost every lease with a term over twelve months to come onto the balance sheet as a right-of-use asset and a matching lease liability. A company that reports under ASPE does not need this work; a company that reports under IFRS, or is converting to it, does.
What the IFRS 16 work covers
A lease inventory is built from your existing lease agreements, the right-of-use asset and lease liability are calculated at an agreed discount rate, and monthly amortization and interest expense are scheduled through the lease term. Operating versus finance lease classification is documented, along with the disclosure schedule that supports the financial statement notes.
Short-term leases and the practical expedient
Short-term leases can often be excluded under a practical expedient available in IFRS 16, which we confirm lease by lease rather than applying a blanket rule that might miss a lease that should be on the balance sheet.
The discount rate question
We use your incremental borrowing rate where it is known, or a reasonable estimate agreed with you where it is not, and document the basis used for every lease in the schedule.
Questions
Frequently asked questions: Lease accounting (ASC 842 / IFRS 16)
Do I need this if my company reports under ASPE?
Generally no. ASPE largely keeps operating leases off the balance sheet. This work applies to a company reporting under IFRS, or converting to it.
Do leases with no fixed term need to be on the balance sheet under IFRS 16?
Short-term leases can often be excluded under a practical expedient in IFRS 16; we confirm this lease by lease.
Does this cover leases we sublease to someone else?
Sublease accounting follows its own rules under IFRS 16, and we scope that separately once we review the head lease and the sublease terms.
What happens when we convert from ASPE to IFRS?
The lease inventory and right-of-use calculations are built as part of that conversion, since this is one of the areas where ASPE and IFRS diverge most.
What exactly is included in lease accounting (ASC 842 / IFRS 16)?
Lease inventory built from your existing lease agreements, and right-of-use asset and lease liability calculated at an agreed discount rate. This work runs inside Google Sheets or Excel, whichever your business already has in place, and it rolls into your regular monthly close rather than sitting off to the side as a separate, unreconciled process.
Do month-to-month leases need to be on the balance sheet?
Short-term leases can often be excluded under a practical expedient available in both standards; we confirm this lease by lease.
What discount rate do you use for the lease liability?
We use your incremental borrowing rate where it is known, or a reasonable estimate agreed with you where it is not, and document the basis in the schedule.
What if our records for lease accounting (ASC 842 / IFRS 16) are not up to date?
If your records are behind, we scope a catch-up first so lease accounting (ASC 842 / IFRS 16) starts from a clean, reconciled base. That catch-up is priced and timed separately from the ongoing engagement, so you always know what each part costs.
Who reviews the work before it reaches us?
Every deliverable under lease accounting (ASC 842 / IFRS 16) is reviewed by a senior reviewer before it reaches you. You keep access to the underlying file at every stage, so nothing about the work happens somewhere you cannot see it.
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Next step
Talk to the team that would run your books
A short call covers your setup, your software and what a first month would look like. You get a written scope and price after it.