Cumulative effect of IFRS 15 and IFRS 16 on maritime company financial statements: a hypothetical case

Nicholas Belesis (), John Sorros, Alkiviadis Karagiorgos and Paraskevas Kousounadis
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Nicholas Belesis: University of Piraeus
John Sorros: University of Piraeus
Alkiviadis Karagiorgos: University of Piraeus
Paraskevas Kousounadis: Halkidon Shipping Corporation

SN Business & Economics, 2021, vol. 1, issue 3, 1-20

Abstract: Abstract Companies preparing their financial statements under International Financial Reporting Standards (IFRS) have to adopt the newly issued IFRS 15—Revenue from Contracts with Customers and IFRS 16—Leases. This paper examines what significant effects these new IFRS may have on the financial statements of maritime companies. The study explores the financial position and performance of a hypothetical maritime company by examining the preparation of two major financial statements, the balance sheet and the income statement, before and after the adoption of IFRS 15 and IFRS 16. These statements and the financial information that they provide are compared. According to the findings of this study, the effect of IFRS 15 is expected to be quite limited and mainly concerns the charging of some direct voyage expenses, which are considered contract costs, between accounting periods. In contrast, the effects of IFRS 16 are expected to be much more intense. The most significant impacts include a strong increase in leverage ratios, an increase in gross profits, and an enormous increase in balance sheet amounts. Understanding these effects is of great importance for shareholders, firms’ valuators, and investors, as it can provide evidence of the influence of these new accounting standards on the financial position of a maritime company. Additionally, the presented findings are essential for accounting standard setters, as they can serve as indicators of changes in the financial states of maritime companies and of possible effects on users.

Keywords: Maritime sector; Shipping sector; International financial reporting standards; Effect of IFRS 15; Effect of IFRS 16; Financial statement analysis (search for similar items in EconPapers)
JEL-codes: G32 M41 M48 (search for similar items in EconPapers)
Date: 2021
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DOI: 10.1007/s43546-021-00043-y

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