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US GAAP and IFRS 16
Storage and handling contracts in the liquid tank terminal industry are normally a service and not a lease.
A change in lease accounting rules in 2019 under US GAAP (Topic 842 ‘Leases’) and IFRS (IFRS 16 ‘Leases’) requires companies to reassess whether their contracts contain either a service or a lease or both. Storage and handling contracts in the liquid tank terminal industry are normally a service and not a lease. Accordingly, in most situations there is no financial reporting consequence for our customers in relation to their storage and handling contracts resulting from the change in lease accounting rules.
In order to assist our customers in assessing this accounting change in detail, Vopak has prepared an extensive customer memo. This memo can be obtained via your local commercial representative. The memo provides practical guidance to support our customers to make the assessment whether a contract contains a service or a lease. Furthermore, it also provides practical examples on why storage contracts in the tank terminal industry are normally a service and not a lease.
We invite you to contact your Vopak commercial representative for any questions or concerns connected to this change in international accounting rules.