Video narration
Why does a monthly office rental look like more than a monthly expense in the accounts? An agreement to use the office over time also creates an obligation to keep paying. It gives your company a controlled right-and something it owes. Under IFRS 16, the present value of qualifying future payments measures a lease liability, with a corresponding right-of-use asset. One represents the office use; the other represents the unpaid commitment. Then they move differently: the asset is depreciated, while the liability accrues interest and falls as payments are made. That changes the expense pattern, not the cash paid. There are boundaries. Short-term leases and leases of low-value assets can qualify for exemptions, when the standard's conditions are met. So why is the office more than monthly rent? Because IFRS 16 treats most leases as a financed right to use an asset: record the right-of-use asset and lease liability.