Leasing under FRS 102

A high-level summary of key considerations to guide you through various scenarios that best fit your circumstances.

Do you need to take action?

The amendments to FRS 102 make significant changes to the accounting for leases, especially as regards lessees with leases currently classified as an operating lease. With limited exceptions, all leases must be recognised on the balance sheet as a right of use asset, with a corresponding lease liability. To help understand how the changes will impact your accounts, the flow diagram below has been designed to identify those leases where action is needed.

Identification of leases is only the first step. Accounting for leases previously ‘off balance sheet’ can be complex, with various transitional arrangements to consider. There is also the consequential impact on related matters, such as:

changes in key reporting metrics (for example profit measures and balance sheet ratios)

borrowing covenants and their compliance may be impacted

systems may need to be changed to ensure ongoing compliance

have possible tax consequences been explored?

We can assist with the implementation of these changes, together with helping you to understand the wider impact.

WEBINAR

FRS 102: Revenue and leases

Understand the latest FRS 102 requirements and explore the practical implications of revenue recognition, lease accounting and financial reporting for Professional Practices.

Available on demand

WEBINAR

FRS 102 changes: Trade unions

Discover the key changes to Financial Reporting Standard 102 (FRS 102) effective from 1 January 2026, and how they affect the preparation of your financial statements.